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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F-A
o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2009
OR
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number0-52324
Olympus Pacific Minerals Inc.
(Exact name of Registrant as specified in its charter)
Olympus Pacific Minerals Inc.
(Translation of Registrant’s name into English)
Canada
(Jurisdiction of incorporation or organization)
Suite 500 – 10 King Street East Toronto, Ontario Canada, M5C 1C3
(Address of principal executive offices)Securities to be registered pursuant to Section 12(b) of the Act: | None | |
Securities to be registered pursuant to Section 12(g) of the Act: | common shares | |
(Title of Class) |
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:None
Number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:268,458,779
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes o No þ
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934.
Yes o No þ
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yeso Noo
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants was required to file such reports). And (2) has been subject to such filing requirements for the past 90 days.
Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):
Large accelerated fileo | Accelerated fileo | Non-accelerated fileþ |
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filling:
U.S. GAAP o | International Financial Reporting Standards as issued | Other þ | ||
By the International Accounting Standards Board o |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
þ Item 17 o Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
Yes o No þ
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EXPLANATORY NOTE
Olympus Pacific Minerals Inc. (the “Company”) is filing this Amendment No.1 on Form 20-F/A to amend (i) Item 4.Information on the Company. to revise certain disclosures regarding its mining properties in Vietnam and the Philippines, and (ii) Item 15.Controls and Procedures. to revise its disclosures regarding (a) the effectiveness of its disclosures controls and procedures and (b) changes in its internal controls over financial reporting.
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ITEM 4:INFORMATION ON THE COMPANY
4A.History and Development of the Company
Olympus Pacific Minerals Inc. (the “Company” or “Olympus”) was incorporated by registration of its memorandum and articles under the laws of the Province of Ontario on July 4, 1951 under the name “Meta Uranium Mines Limited”. Effective August 24, 1978, the Company changed its name from “Meta Uranium Mines Limited” to “Metina Developments Inc.” The Company continued under the Company Act (British Columbia) under the name “Olympus Holdings Ltd.” on November 5, 1992 and consolidated its share capital on a 4.5:1 basis. The Company further consolidated its share capital on a 3:1 basis and changed its name from “Olympus Holdings Ltd.” to “Olympus Pacific Minerals Inc.” on November 29, 1996.
On February 26, 1997, and subsequently amended on August 18, 1997, the Company entered into the Ivanhoe agreement with Ivanhoe Mines Limited (“Ivanhoe”) (formerly Indochina Goldfields Ltd.) and Zedex Ltd. (“Zedex”) (formerly Iddison Group Vietnam Limited, Iddison Holdings Limited, Iddison Limited and IT Capital Limited). Pursuant to the Ivanhoe Agreement, which was completed on September 11, 1997, the Company acquired from Ivanhoe all of the shares of Formwell Holdings Limited (“Formwell”), which holds all the shares of Bong Mieu Holdings Limited, which in turn holds 80% of the shares of Bong Mieu Gold Mining Limited (“Bogomin”). Bogomin, together with other local and national branches of the government of Vietnam, holds various mining and exploration licenses comprising the Bong Mieu gold mine and the Tien Ha properties in Quang Nam — Da Nang Province, in the Socialist Republic of Vietnam. The Company also entered into a joint venture agreement with Ivanhoe and Zedex, whereby at December 31, 2001, the Company had a 57.18% interest in New Vietnam Mining Corporation (“NVMC”). NVMC was comprised of Olympus (57.18%), Ivanhoe (32.64%) and Zedex (10.18%). The Phuoc Son Gold Project is held by NVMC. Olympus is the operator of the project.
In 2000, the Company was successful in raising CAD$3.4 million in equity financings. During 2000, the Company accelerated its exploration activities at the Phuoc Son gold project in Central Vietnam.
In 2003, the Company’s subsidiary, NVMC, entered into a strategic alliance with Mien Trung Industrial Company (“Minco”), a mining company controlled by the local provincial government, resulting in the formation of the Phuoc Son Gold Company (“PSGC”) for the purposes of exploration and extraction activities and any other related activities. The Company owns 100% of NVMC which, in turn, owns an 85% interest in the Phuoc Son Gold Company (“PSGC”). Minco, owns 15% of PSGC. Refer to Item 4D.1 for further details on the joint venture.
On March 1, 2004, the Company entered into a Vend-in Agreement and on June 21, 2004 an Extension of Vend-in Agreement with Ivanhoe Mines Ltd and Zedex Limited (the “vendors”) to acquire the remaining interests held by the vendors in NVMC. In June 2004, the Company acquired the remaining 42.82% of the outstanding shares of NVMC from Zedex Limited (now referred to as “Zedex Minerals Limited” after a name change) and Ivanhoe.
In other areas in Vietnam, the Company is continuing broad regional geology programs to identify other potential exploration areas. Additional applications for exploration licenses have been filed in Vietnam and the Company has also lodged an application in Laos. These applications are in early stages of review by the respective government bodies. Based on the Company’s experience working in these countries, the timing of application approvals can vary significantly, and are expected to be granted within the next one to two years.
On November 23, 2006, the Company signed a Memorandum of Agreement and Supplement to Memorandum of Agreement (collectively, the “MOA”) with Abra Mining and Industrial Corporation (“AMIC”) and Jabel Corporation (“Jabel”) that allows the Grantee (defined as the Company and a Philippine national corporation to be identified by the Company) to
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acquire an option to earn a 60% interest in the Capcapo Property (as defined below) upon completing a specified level of expenditures on the Capcapo Property, located in the Philippines. The Capcapo Property consists of a Mineral Production Sharing Agreement (“MPSA”) No. 144-99-CAR (“MPSA 144”), which covers 756 hectares in Capcapo, Licuan-Baay, Abra Province, Philippines, and a two-kilometre radius buffer zone around MPSA 144, with an area of about 3,500 hectares, which falls under a neighbouring Exploration Permit Application (“EXPA”). Jabel holds the Property in its name and is a minority shareholder in AMC. AMIC has an operating agreement with Jabel in respect of the Capcapo Property. As at June 30, 2010, the joint venture terms had not been finalized due to ongoing negotiations with the partners.
On May 31, 2007, the Company registered a Philippine corporation with the Republic of the Philippines Securities and Exchange Commission under the corporate name of Kadabra Mining Corp (“Kadabra”). Kadabra is 100% beneficially owned by the Company. Kadabra will hold the Company’s 40% interest in the joint venture and is used to track expenditures by the Company on the joint venture. On September 21, 2007, the Company announced that it had completed its due diligence at Capcapo.
Following the initiation of Community Consultation in accordance with Philippine laws in the fourth quarter of 2007 and the commencement in the first quarter of 2008 of a formal program of Free, Prior and Informed Consent, undertaken in conjunction with the National Commission on Indigenous Peoples (NCIP), all efforts in Capcapo area have concentrated on obtaining Community approval which is required before any further exploration can continue. At June 30, 2010, the formal report and community decision was still awaited from the NCIP. No further work will be undertaken at the project until this issue is resolved.
Total cumulative spending on this project as at December 31, 2008 was $865,779 which was capitalized to deferred exploration. At December 31, 2008 the full $865,779 of capitalized deferred exploration expenditure has been written off. Management considers this is a prudent measure given the political unrest in the Philippines and the economic uncertainty of world markets at present. Refer to Item 3D for list of risk factors.
In July, 2007, the Company signed a Framework of Laos and Cambodia Joint Venture Agreement with Zedex covering exploration activities in Laos and Cambodia. Refer to Exhibit 3.20. As this joint venture is in the early stages of set-up, there was minimal activity in 2007, 2008 and 2009. In January 2008 the Company was granted a two year Exploration License over a 42 square kilometres area in the Phuoc Son project area, in Quang Nam Province, Vietnam. The Company’s application for a further two year Exploration License over a 28 square kilometres area in the same area is pending. It is anticipated that this license will be approved.
Development activities for the 2009 year comprise 333m of level drives and 194m of raises.
The supplement to Ho Gan Environmental Impact Assessment to include Nui Kem underground was replaced with Nui Kem Environmental Impact Assessment Report submitted to Department of Natural Resources on December 10, 2009. Formal inspection occurred early in the first quarter of 2010. All Environmental Impact Assessment amendments and requirements, as advised by the Department of Natural Resources, have been complied with and notice of formal approval is now awaited.
The Bong Mieu Underground project (VN230) was placed into commercial production on April 1, 2009.
On March 6, 2008, the Company’s common shares commenced trading on the OTC Bulletin Board in the United States.
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On March 26, 2008 the Company received a positive independent feasibility study “Technical Report on Feasibility Studies for the Phuoc Son Gold Project in Quang Nam Province, Vietnam” (the “Technical Report”) authored by independent mining and geological consultants, Terra Mining Consultants/Stevens & Associates. The full text of the report is available on Sedar website. (www.sedar.com).The Technical Report confirmed the feasibility of the Company’s goal to design and construct an efficient and environmentally sound operation that will bring economic benefits to the region and the shareholders. In July 2008 the Company decided to self-fund the Dak Sa project at Phuoc Son by the treatment of high-grade Dak Sa ore at the Bong Mieu gold processing plant on a toll treatment basis.
On August 28, 2008 the Company received approval from the Vietnamese authorities to trial the toll treatment of Phuoc Son ore at its Bong Mieu plant. The Company commenced sourcing high-grade ore from the Phuoc Son mine in a trial trucking and toll treatment operation in August 2008. The trial treatment operation was carried out over three months. Following the trial the Company undertook plant modifications to enable more efficient processing of the high-grade Phuoc Son ore.
On December 15, 2008, the Company was granted and registered with the Department of Geology and Minerals of Vietnam the Bong Mieu Exploration Licence No 2125/GP-BTNMT. Refer to Exhibit 3.31.
In March 2009, the Company received approval from the Vietnamese authorities for a temporary trucking permit to source and toll treat high grade ore from Phuoc Son through the Bong Mieu Gold Plant. In mid September 2009 a trucking permit was granted allowing toll treatment of Phuoc Son ore at the Bong Mieu Plant until December 2010.
In March 2010 the Company obtained private placement funding of CAD$12,750,000. The net funds will be used in the establishment of a processing plant at Phuoc Son. The financing is in the form of nine percent subordinated unsecured convertible promissory notes which mature on March 26, 2014.
In June 2010 the Company obtained private placement funding of US$21,960,000. The net proceeds will be used for the construction of a processing facility at the Company’s Phuoc Son and Bong Mieu Mines in Vietnam and for general exploration and corporate purposes. The financing is in the form of gold delivery notes which mature on May 31, 2013 and bear interest at a rate of eight percent.
Amalgamation with Zedex Minerals Limited
On November 10, 2009 the Company announced its intention to merge with Zedex Minerals Limited (“Zedex”). At a Special General Meeting of Zedex’s shareholders held on December 17, 2009 Zedex’s shareholders approved the merger by overwhelming majority (approved by 98.9% of those voting). On January 12, 2010, the Company and Zedex amalgamated. Under the terms of the merger Zedex’s shareholders received one share of the Company for every 2.4 Zedex shares owned, resulting in an issuance on January 25, 2010 of 54,226,405 new common shares in Olympus and the distribution to them, on a prorata basis, of the 65,551,043 common shares in Olympus owned by Zedex. Management of the Company believes that the merger will (i) lead to corporate and operating synergies, particularly at the management and senior staff levels, (ii) facilitate development of Zedex’s Bau Gold Project, (iii) advance the development of the Company’s Bong Mieu and Phuoc Son operations, (iv) simplify the existing capital structures of each company in as much as each company owns shares in the other, and (v) simplify the ownership structures of the various assets they each own interests in.
Zedex management were provided with contracts with Olympus. Mr. Leslie Robinson, director of Zedex, was appointed to the Board of Olympus on December 17, 2009. Mr. Rodney Murfitt, formerly Chief Geologist for Zedex, became Group Exploration Manager for Olympus. Mr. Paul
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Seton, formerly CEO of Zedex, became Senior Vice President Commercial for Olympus and Ms. Jane Bell (previously Baxter), formerly CFO and Company Secretary for Zedex, became Vice President Finance for Olympus.
All costs associated with the amalgamation have been expensed during the year, these being recorded in professional and consulting fees in the consolidated statement of operations and comprehensive loss.
On January 12, 2010 the Company issued 4,395,835 options to former Zedex option holders in partial consideration of the amalgamation of Zedex and Olympus NZ
The Company’s executive office is located at:
Suite 500 — 10 King Street East
Toronto, Ontario, M5C 1C3
Canada
Toronto, Ontario, M5C 1C3
Canada
The Company’s registered and records office is located at Suite 500, 10 King Street East, Toronto, Ontario, M5C 1C3, Canada. Its telephone number is (416) 572- 2525.
The Company has financed its operations through the financings listed in the table shown below.
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Table No. 2: Financings
Fiscal Year | Nature of Issuance | Number of Shares | Capital Raised | |||||||
December 31, 2000 | Private Placement(1) | 6,625,000 | CAD$ | 1,840,000 | ||||||
December 31, 2001 | Private Placement(2) | 10,964,500 | CAD$ | 3,944,000 | ||||||
December 31, 2002 | Nil | Nil | Nil | |||||||
December 31, 2003 | Private Placement(3) | 21,163,459 | CAD$ | 6,832,063 | ||||||
December 31, 2004 | Private Placement(4) | Nil | Nil | |||||||
December 31, 2005 | Private Placement (5) | 32,645,000 | CAD$ | 11,063,500 | ||||||
December 31, 2006 | Private Placement(6) | 27,000,000 | CAD$ | 15,660,000 | ||||||
December 31, 2007 | Private Placement and Public Offering(7) (8) | 60,106,503 | CAD$ | 37,153,601 | ||||||
December 31, 2008 | Nil | Nil | Nil | |||||||
December 31, 2009 | Private Placement(9) | 16,216,216 | US$ | 3,000,000 |
Notes: | ||
(1) | In 2000, the Company raised a total of CAD $1,840,000 through two separated financings: |
(i.) | In March 2000, 4,500,000 units were sold for CAD$0.22/unit. Each unit was comprised of one common share and one two-year share purchase warrant entitling the holders to acquire up to 4,500,000 shares at CAD$0.30/unit during the first year and at CAD$0.40/unit during the second year; | ||
(ii.) | In August 2000, 2,125,000 common shares were issued at CAD$0.40/share to various holders. |
(2) | In 2001, the Company completed three financings and raised a total of CAD$3,944,000: |
(i.) | In February, 1,200,000 units were sold for CAD$0.60/unit. Each unit was comprised of one common share and one share purchase warrant, each whole purchase warrant exercisable at an exercise price of CAD$0.75/warrant for a one-year period, and CAD$1.00/warrant for the second year; | ||
(ii.) | In July, 552,000 units were sold for CAD$0.50/unit. Each unit was comprised of one common share and one share purchase warrant, each whole purchase warrant exercisable at an exercise price of CAD$0.65/warrant for a one-year period, and CAD$1.00/warrant for the second year; | ||
(iii.) | In December, 9,212,500 units were sold for CAD$0.32/unit. Each unit was comprised of one common share and one share purchase warrant, each whole purchase warrant exercisable at an exercise price of CAD$0.32. |
(3) | In 2003, a total placement, raising CAD$6,832,063 was completed in three closings: |
(i.) | In February, 1,562,750 units were sold for CAD$0.40/unit. Each unit was comprised of one common share and one share purchase warrant, each whole purchase warrant exercisable at an exercise price of CAD$0.40/unit for a one-year period; | ||
(ii.) | In March, 3,267,500 units were sold for CAD$0.40/unit. Each unit was comprised of one common share and one share purchase warrant, each whole purchase warrant exercisable at an exercise price of CAD$0.50/warrant for a one-year period; | ||
(iii.) | In October, 16,333,209 units were sold for CAD$0.30/unit. Each unit consists of one common share and one-half of one common share purchase warrant, each whole purchase warrant exercisable at an exercise price of CAD$0.40/unit for a one-year period and thereafter at a price of CAD$0.50/unit for a one-year period. |
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(4) | On June 29, 2004, the Company closed a “Vend-In Agreement”, whereby it acquired the remaining 42.82% interest in the NVMC joint venture. The acquisition resulted in the issuance of 13,483,133 common shares of the Company of which Zedex received 3,205,467 shares and Ivanhoe received 10,277,646 shares. No capital was raised in this transaction. |
(5) | In 2005, a total placement, raising CAD$11,063,500 was completed in two closings: |
(i.) | In January, the Company closed a CAD$5,080,000 private placement with Dragon Capital Markets Limited (“Dragon Capital”) by issuing 12.7 million common shares priced at CAD$0.40/unit. In consideration for its service, Dragon Capital was paid a finders’ fee of US$261,471 and was granted 1,270,000 warrants exercisable at CAD$0.40/unit for a period of one year from the date of closing; | ||
(ii.) | In September, the Company received CAD$5,983,500 from the closing of a private placement and issued 19,945,000 common shares priced at CAD$0.30/share. |
(6) | On March 31, 2006, a private placement closed where the Company issued 27,000,000 shares at CAD$0.58 raising CAD$15,660,000. |
(7) | On March 19, 2007, the Company completed a non-brokered private placement, of 21,428,571 shares at a price of CAD$0.56 per share, for gross proceeds of CAD$12,000,000 and net proceeds of CAD$11,967,772. The net proceeds were used for ongoing exploration, feasibility studies and development work on the Company’s mineral projects and for general corporate purposes. |
(8) | On August 10, 2007, the Company closed an offering (the “Offering”) of units of the Company (“Units”) for aggregate gross proceeds of CAD$25,000,000 (the “Closing”). Pursuant to the Offering, the Company issued and sold a total of 38,461,538 Units at a price of CAD$0.65 per Unit. Each Unit was comprised of one common share of the Company (a “Share”) and one-half of one common share purchase warrant (“Warrant”). Each whole Warrant will be exercisable at CAD$0.80 until August 10, 2009. The Company granted the Agents an over-allotment option (the “Over-Allotment Option”) exercisable in whole or in part at the sole discretion of the Agents, for a period of 30 days from closing of the Offering, to purchase up to an additional 5,769,230 Shares (“Additional Shares”) at a price of CAD$0.62 per Additional Share and up to an additional 2,884,615 Warrants (“Additional Warrants”) at a price of CAD$0.06 per Additional Warrant, for further gross proceeds of up to CAD$3,750,000, if exercised in full. In consideration for their services, the Corporation paid a fee of CAD$1,500,000 to the Agents (equal to 6% of the gross proceeds realized from the sale of Units). The Agents were also granted non-transferable options (the “Compensation Options”) to acquire 2,307,692 Units (each an “Agents’ Unit”) (equal to 6% of the number of Units issued pursuant to the Offering). Each Compensation Option is exercisable to acquire one Agents’ Unit at CAD$0.65 until August 10, 2009. Each Agent’s Unit consists of one common share of the Company and one-half of one common share purchase warrant (“Agents’ Warrants”). Each whole Agents’ Warrant will be exercisable to acquire one common share of the Company (a “Agents’ Warrant Share”) at a price of CAD$0.80 per Agents’ Warrant Share until August 10, 2009. On September 7, 2007,the over-allotment option granted to the agents in connection with the Company’s public offering of units (the “Offering”), was exercised in respect of 216,394 common shares (“Additional Shares”) at a price of CAD$0.62 per Additional Share and 323,947 warrants (“Additional Warrants”) at a price of CAD$0.06 per Additional Warrant, resulting in additional gross proceeds of CAD$153,601. Each whole Warrant will be exercisable at CAD$0.80 until August 10, 2009. The partial exercise of the over-allotment options brings the aggregate gross proceeds to the Company under the Offering to CAD$25,153,601. The net |
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proceeds from the Offering are being used for further exploration and feasibility studies at the Company’s Bong Mieu Gold and Phuoc Son Gold properties in Vietnam and the Capcapo property in the Philippines and for working capital and general corporate purposes. |
(9) | In May 2009 the Company completed a non-brokered private placement of 16,216,216 shares at a price of US$0.1850 per share, for gross proceeds of $3,000,000 and net proceeds of US$2,845,264. Agents for the private placement were paid a cash commission of 5% of the gross proceeds of the placement. |
(10) | In March 2010, the Company obtained private placement funding of CAD$12,750,000. The net funds will be used in the establishment of a processing plant at Phuoc Son. The financing is in the form of nine percent subordinated unsecured convertible promissory notes which mature on March 26, 2014. |
(11) | In June 2010 the Company obtained private placement funding of US$21,960,000. The net proceeds will be used for the construction of a processing facility at the Company’s Phuoc Son and Bong Mieu Mines in Vietnam and for general exploration and corporate purposes. The financing is in the form of gold delivery notes which mature on May 31, 2013 and bear interest at a rate of eight percent. |
The Company does not have an agent in the United States.
Capital Expenditures
The table below shows the historical capital balances, in United States dollars:
Capital Assets, Mineral Properties and Deferred | ||||
As at December 31 | Exploration and Development Costs | |||
2000 | $ | 7,535,463 | ||
2001 | $ | 7,058,678 | ||
2002 | $ | 4,957,736 | ||
2003 | $ | 6,759,545 | ||
2004 | $ | 15,468,222 | ||
2005 | $ | 25,387,978 | ||
2006 | $ | 30,148,598 | ||
2007 | $ | 43,132,402 | ||
2008 | $ | 44,562,894 | ||
2009 | $ | 41,683,143 |
4.BBusiness Overview
Forward-Looking Statements
Safe Harbor Statement under the United States Private Securities Litigation Reform Act of 1995:
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Except for the statements of historical fact contained herein, the information presented constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Often, but not always, forward-looking statements can be identified by the use of words such as “plans”, “expects”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, “believes”, or variation of such words and phrases that refer to certain actions, events or results to be taken, occur or achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the actual results of exploration activities, the estimation or realization of mineral reserves and resources, capital expenditures, costs and timing of the development of new deposits, requirements for additional capital, future prices of gold, possible variations in ore grade or recovery rates, failure of plant, equipment or processes to operate as anticipated, accidents, labor disputes and other risks of the mining industry, delays in obtaining governmental approvals, permits or financing or in the completion of development or construction activities, currency fluctuations, title disputes or claims limitations on insurance coverage and the timing and possible outcome of pending litigation, as well as those factors discussed under Item 3 in the section entitled “Risk Factors”. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.
4A.1.General
General
Olympus Pacific Minerals Inc. (the “Company” or “Olympus”) is an international mining exploration and development company focused on the mineral potential of Vietnam and the Southeast Asia. Olympus has been active in Vietnam since the mid-1990s on its own account and through associated companies, New Vietnam Mining Corporation and Bong Mieu Gold Mining Corporation, and maintains an office in Danang in central Vietnam. In January 2010 the Company acquired by merger with Zedex Minerals Limited, North Borneo Gold Sdn Bhd which operates the Bau Gold Project near Kuching in East Malaysia, Binh Dinh New Zealand Gold Company which operates the Thien Tuan Gold Project near Qui Nhon in Central Vietnam and GR Enmore Pty Ltd, which operates a Gold Project in New South Wales Australia.
The Company’s two most advanced properties, covered by investment licenses, are the 70 square kilometres Phuoc Son Gold property and the 30 square kilometres Bong Mieu Gold property. Both properties are located in central Vietnam along the Phuoc Son-Sepon Suture. The Bong Mieu and Phuoc Son Gold properties are approximately 74 kilometres apart. Proven and probable reserves exist for the Bong Mieu Central Gold Mine.
The Ho Gan plant at the Bong Mieu gold property was commissioned in April 2006 and commercial production started in the fourth quarter of 2006. The Company poured its first 3.6 kg doré bar on February 15, 2006. To December 31, 2009 the plant had produced 50,000 ounces of gold. Plant output has steadily improved with recent modifications enabling output of up to 3,300 ounces per month.
Exploration work to date has resulted in one new significant discovery in the Bong Mieu East area (Thac Trang) as well as a number of new, surface showings. In addition, further exploration will be required to define the extent of the deposits in several directions. Based on results of the
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exploration work completed to date, management believes the potential for additional discoveries and resource expansion at the Bong Mieu property is positive. Underground evaluation studies are continuing at the Bong Mieu Underground mine, located within one kilometre of the operating Bong Mieu Central plant site.
The Phuoc Son Gold property is located in central Vietnam, 74 kilometres from the Bong Mieu Gold property. The property hosts over 30 known gold prospects and two known high-grade gold deposits in the Dak Sa area of the property. Phuoc Son Gold Mining Company has been granted a Mining Licence by the Government of Vietnam to mine and develop its Dak Sa Deposits (North and South Deposits). The Mining Licence was the last major permit required prior to proceeding with development and production. All major environmental approvals have been received. Exploration work to date has defined the “productive” Dak Sa zone, which contains the two deposits, North and South Deposits, over a minimum length of approximately five kilometres. Evaluation of the large Phuoc Son land package continues to reinforce the potential of the overall property to host new deposits which could be mined in conjunction with the anticipated Dak Sa operation or have potential to be stand alone deposits. The Phuoc Son mine was put into commercial production effective October 1, 2009.
The Bau Gold Project comprises consolidated mining and exploration tenements that collectively cover more than 828 km2 of the most highly prospective ground within the historic Bau Goldfield in Sarawak, East Malaysia. The property is attributed with significant gold resources and has been independently assessed as having substantially greater resource potential.
The Tien Thuan Gold Project in Central Vietnam covers about 100 km2of hilly terrain, encompassing numerous hard rock and alluvial gold occurrences within and peripheral to a large, multiphase intrusive complex of predominantly granitic composition. Quartz veins extend over 15 km of strike. Two discrete intrusive featuring vein and disseminated molybdenum mineralization have been discovered. Geological mapping has revealed outcropping features that are broadly consistent with economically productive circum-pacific porphyry (copper-molybdenum-gold-silver) deposits. Exploration is in progress.
The Enmore Gold Project covers approximately 325km2 within the Enmore-Melrose Goldfield of northeastern New South Wales, Australia. The Company holds a 100 percent interest in two exploration licences covering 290km2and is earning an 80 percent interest in two exploration licences covering 35 km2.The geological setting is broadly analogous to that at the nearby Hillgrove copper gold mine. Exploration results to date have confirmed the potential for lode and/or quartz stock-work style gold deposits at a number of individual prospects, including: Bora, Sunnyside, Lone Hand, Stony Hill, Sheba and Tabben. Potentially minable grades and widths have to date been drill-intersected at Sunnyside and Bora prospects. Further work is planned before a review report is presented to the Company’s directors.
4A.2.Description of Mining Industry
Our business is highly speculative. We are exploring for base and precious metals and other mineral resources. Ore is rock containing particles of a particular mineral (and possibly other minerals which can be recovered and sold), which rock can be legally extracted, and then processed to recover the minerals which can be sold at a profit. Although mineral exploration is a time consuming and expensive process with no assurance of success, the process is straight forward. First, we acquire the rights to enable us to explore for, and if warranted, extract and remove ore so that it can be refined and sold on the open market to dealers. Second, we explore for precious and base metals by examining the soil, rocks on the surface, and by drilling into the
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ground to retrieve underground rock samples, which can then be analyzed. This work is undertaken in staged programs, with each successive stage built upon the information gained in prior stages. If exploration programs discover what appears to be an area which may be able to be profitably mined, we will focus our activities on determining whether that is feasible, while at the same time continuing the exploratory activities to further delineate the location and size of this potential ore body. Things that will be analyzed by us in making a determination of whether we have a deposit which can be feasibly mined at a profit include:
1. | The amount of mineralization which has been established, and the likelihood of increasing the size of the mineralized deposit through additional drilling; | ||
2. | The expected mining dilution; | ||
3. | The expected recovery rates in processing; | ||
4. | The cost of mining the deposit; | ||
5. | The cost of processing the ore to separate the gold from the host rocks, including refining the precious or base metals; | ||
6. | The costs to construct, maintain, and operate mining and processing activities; | ||
7. | Other costs associated with operations including permit and reclamation costs upon cessation of operations; | ||
8. | The costs of capital; | ||
9. | The costs involved in acquiring and maintaining the property; and | ||
10. | The price of the precious or base minerals. For example, the price of one ounce of gold for the years 2001-2009 ranged from a low of $271 in 2001, to a high of $1,212.50 in 2009. At June 30 , 2010, the price of gold was $1,244 per ounce1. |
Our analysis will rely upon the estimates and plans of geologists mining engineers, metallurgists and others.
1 | Based upon the Average Spot Price of Gold, London PM fix. |
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If we determine that we have a feasible mining project, we will consider pursuing alternative courses of action, including:
• | seeking to sell the deposit or the Company to third parties; | ||
• | entering into a joint venture with larger mining company to mine the deposit; or | ||
• | placing the property into production ourselves. |
There can be no assurance, that we will discover any precious or base metals, establish the feasibility of mining a deposit, or, if warranted, other than the Bong Mieu East property which is currently in production, develop a property to production and maintain production activities, either alone or as a joint venture participant. Furthermore, there can be no assurance that we would be able to sell either the deposit or the Company on acceptable terms, or at all, enter into such a joint venture on acceptable terms, or be able to place a property into production ourselves. Our mining operations are subject to various factors and risks generally affecting the mining industry, many of which are beyond our control. These include the price of precious or base metals declining, the possibility that a change in laws respecting the environment could make operations unfeasible, or our ability to conduct mining operations could be adversely affected by government regulation. Reference is made to “Item. 3.Key Information. D. Risk Factors.”
REGULATION OF MINING INDUSTRY AND FOREIGN INVESTMENT IN VIETNAM
The current Vietnamese mining law was enacted in 1996, with various subsequent modifications. The Vietnamese Mining Law was initially drafted by an international law firm (Phillip Fox) and broadly modeled on Australian and Canadian Mining Law. A company may apply to the licensing authority, the Ministry of Natural Resources & Environment, for prospecting, exploration and mining Licenses, much as in Australia and Canada. A prospecting license provides for low impact prospecting over a broad area for a 2 year term; an exploration license provides an exclusive right to conduct advanced exploration over areas of up to 50 square kilometres for an initial 2 year term, after which 50% of that area may be renewed for a further 2 year term. Exploration license holders have the right to apply for a mining license at any time up to 6 months after expiry of an exploration license. A mining preliminary feasibility study, an Environmental Impact Report and an investment license are required to support a mining license application. Investment licenses are issued by the Ministry of Planning and Investment. A mining license provides the right to mine specified minerals for the life-of-mine indicated by the preliminary feasibility study.
On January 11, 2007, Vietnam became a full member of the World Trade Organization (“WTO”). After becoming a full member of the WTO, various commitments Vietnam has made for joining the WTO will become effective. These commitments impact a number of areas such as tariffs and duties on goods, foreign service providers’ access to Vietnam, foreign ownership, reforms on Vietnam’s legal and institutional set up for trade, foreign exchange, commercial business, trading rights, policy making, duties, restrictions, pricing and export restrictions. The overall changes will further expand Vietnam’s access to the global economy and facilitate doing business in Vietnam. These reforms have no immediate impact on the Company but would likely make it easier in the future for the Company to conduct its business activities in Vietnam.
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Since Vietnam is now a member of the World Trade Organization (“WTO”), foreign companies under the terms of WTO membership, are expected to be treated on an equal basis as Vietnamese companies.
Profits earned in Vietnam transferred abroad annually shall be the amount of profits of a fiscal year distributed to the foreign investor after payment of corporate income tax, plus (+) other profits earned in the year, such as profits from assignment of capital, from assignment of assets, items of corporate income tax which were paid and then refunded to the foreign investor in accordance with the provisions of the Law on Corporate Income Tax; less (-) items which the foreign investor has used or undertaken to use to re-invest in Vietnam, profit items which the foreign investor has used to pay out the expenses of such foreign investor for production and business operations or for private needs of the investor in Vietnam, and profit items provisionally transferred during the year. The amount of income that an investor is permitted to transfer abroad in a fiscal year shall be determined after the Company submits an audited financial report and a tax finalization report for the fiscal year with the local tax office which manages the enterprise. Foreign investors shall be permitted to transfer profits abroad in the following circumstances: (i) Annual transfer and one-off transfer of the whole of the amount of profits distributed or earned after the end of the fiscal year and after filing a tax finalization report with the tax office, (ii) Provisional transfer during a fiscal year once every quarter or once every six months after payment of corporate income tax in accordance with the Law on Corporate Income Tax (except for foreign investors exempt from corporate income tax in accordance with the provisions of the Law on Corporate Income Tax and the Law on Foreign Investment in Vietnam), (iii) Transfer of profits upon termination of business operation in Vietnam in accordance with the Law on Foreign Investment in Vietnam.
REGULATION OF MINING INDUSTRY AND FOREIGN INVESTMENT IN MALAYSIA
The two main legal instruments that govern activities relating to minerals are the Mineral Development Act, 1994 and the State Mineral Enactment. The Mineral Development Act came into force in August 1998, while the State Mineral Enactment is currently at various stages of being adopted by the respective State Governments.
The Mineral Development Act 525 of 1994 defines the powers of the Federal Government for inspection and regulation of mineral exploration and mining and other related issues. The State Mineral Enactment provides the States with the powers and rights to issue mineral prospecting and exploration licenses and mining leases and other related matters. The Governor of the state of Sarawak, in which the Bau Project is located, has statutory rights to forfeit or cancel the mining tenements if there is a breach of, or default in the observance of any of the covenants or conditions attached to the relevant Mining Tenement.
Parties may apply for a General Prospecting License (GPL) for an initial term of 2 years (with renewal options), or an Exclusive Prospecting License (EPL) for an initial term of 4 years (with one renewal period for a further 4 years). Mining operations require either a Mining Certificate or a Mining License, both of which have a maximum term of 21 years. A Mining Certificate allows mining in unalienated land with the permission of the owner and requires negotiation of compensation and royalty.
Malaysia has been a member of the World Trade Organisation (“WTO”) since 1 January 1995 and has made various commitments pursuant to the General Agreement on Trade in Services (“GATS”) including setting out the transactions relating to investment in Malaysia which would require approval. Since Malaysia is a member of of the WTO, foreign companies under the terms of the WTO membership are expected to be treated on an equal basis as Malaysian Companies.
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No restrictions are imposed on foreign companies investing in Malaysia with regard to repatriation of capital, interest, profits and dividends. No royalties are payable to the Federal Government.
4C. Organizational Structure
4D. Property, Plant and Equipment
General
The Company is devoting most of its resources to the exploration and development of two gold mining properties in Vietnam — the Phuoc Son Property and the Bong Mieu Property. The recent addition subsequent to year end of a third Vietnam property and a Malaysia property following the amalgamation with Zedex Minerals Ltd has diversified the Company property portfolio and reduced sovereign risk.
The Bong Mieu Property, of which the Company owns an 80% interest, commenced production activities in the fourth quarter of 2006 and, through to December 31, 2009, has produced 34,207 ounces of gold. The Company is currently undergoing modifications to the plant in order to improve recoveries and is conducting exploration activities in order to increase the known reserves on the property.
The Company’s other major property is the Phuoc Sun Property, in which it owns an 85% interest. This property is located in the western highlands of Quang Nam Province, in central Vietnam, some eight kilometres (14.5 kilometres by road) northwest of the small town of Kham Duc and approximately 90 kilometres southwest of the costal city of Da Nang, the fourth largest city in Vietnam. The Company is currently conducting exploration activities directed at obtaining additional information on the ore body on this property and estimates it will require
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approximately $52 million in order to complete plant construction and conduct additional exploration activities to increase the known mineralization on the property. In March 2009 the Company began transporting gold ore from this property to its processing facility at the Bong Mieu mine.
In addition to its interests in Vietnam, the Company has an interest in a property in the Philippines but because of difficulties it has encountered in negotiating a joint venture agreement, has no immediate plans to explore the property, and has written off its $865,779 investment in the property.
In order to acquire, explore and develop its property interests in Vietnam, the Company was required to acquire licenses from the Vietnamese government. Reference is made to paragraph 4.A for a discussion of the regulation of mining activities in Vietnam. Following is a schedule of the Investment and Mining Licenses the Company, through its subsidiaries or affiliated companies, holds:
Schedule of Investment Licenses
PROJECT | OWNER | LICENSE | AREA | STATUS | GRANT DATE | TERM | EXPIRY DATE | |||||||
1. Bong Mieu | BOGOMIN | Certificate No 331022000008 | 30 Sq Km | Granted | 5/3/90 | 25 years | 5/3/2015 | |||||||
2. Phuoc Son | PSGC | IL 2355/GP | 70 Sq Km | Granted | 8/7/2008 | 25 years | 20/10/2033 |
Schedule of Mining Licenses
EXPIRY | ||||||||||||||||
PROJECT | MINE | OWNER | LICENSE | AREA | STATUS | GRANT DATE | TERM | DATE | ||||||||
1. Bong Mieu | Ho Gan (VN220) | BOGOMIN | ML592/CNNg | 358 Ha | Granted | 22/7/92 | 25 years | 22/7/2017 | ||||||||
Bong Mieu | Nui Kem (VN230) | BOGOMIN | ML592/CNNg | 358 Ha | Granted | 22/7/92 | 25 years | 22/7/2017 | ||||||||
Bong Mieu | Ho Ray | BOGOMIN | Proposed new MLA | Not yet defined | Proposed | — | — | — | ||||||||
2. Phuoc Son | Dak Sa Bai Dat | PSGC | ML116/GP-BTNMT | 1.00 Ha | Granted | 23/1/2006 | 5.5 years | 31/7/2011 | ||||||||
Phuoc Son | Dak Sa Bai Go | PSGC | ML116/GP-BTNMT | 0.52 Ha | Granted | 23/1/2006 | 5.5 years | 31/7/2011 |
Schedule of Exploration Licenses
Phuoc Son | PSGC | EL 67/GP-BTNMT | 42 Sq Km | Granted | 10/01/2008 | 2 years | 10/01/2010 |
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Phuoc Son | PSGC | EL 67/GP-BTNMT | 28 Sq Km | Grant Pending | 10/01/2010 | 2 years | 10/01/2012 | |||||||||
Bong Mieu | BOGOMIN | EL 2125/GP- BTNMT | 30 Sq Km | Granted | 24/10/2008 | 2 years | 24/10/2010 |
Schedule of Certificates
COMPANY | TYPE OF CERTIFICATE | DATE GRANTED | TERM | EXPIRY DATE | ||||
Bong Mieu Gold Mining Company | Gold export certificate | Dec 31, 2009 | 1 year | Dec 31, 2010 | ||||
Phuoc Son Gold Mining Company | Gold export certificate | Dec 31, 2009 | 1 year | Dec 31, 2010 | ||||
Bong Mieu Gold Mining Company | Land Use Certificate | Oct 9, 1993 | 25 years | Sep 2017 |
Schedule of Exploration Tenements (Applications)
PROJECT | E.L. REG. # | REG. HOLDER | ||||||
1. Phuoc Son | 67/GP-BTNMT | PSGMC | ||||||
2. Bong Mieu | 2125/GP BTNMT | BOGOMIN | ||||||
3. Capcapo | MPSA#141, EXPA#085 | AMIC | ||||||
4. Khau Pum | — | OPVL | ||||||
5. Phuoc Thanh | — | PSGC | ||||||
6. Sanakham | MEAPA | OYM |
Global Resource Estimates
CAUTIONARY NOTE TO U.S. INVESTORS CONCERNING ESTIMATES OF
MEASURED AND INDICATED MINERAL RESOURCES
MEASURED AND INDICATED MINERAL RESOURCES
This section and section 4D.1 describing the Phuoc Son Gold Property and section 4D.2 describing the Bong Mieu Gold Property use the term “indicated resources.” We advise U.S. investors that while those terms are recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them. U.S. investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves.
CAUTIONARY NOTE TO U.S. INVESTORS CONCERNING ESTIMATES OF
INFERRED MINERAL RESOURCES
INFERRED MINERAL RESOURCES
This section uses the term “inferred resources.” We advise U.S. investors that while this term is recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize it. “Inferred resources” have a great uncertainty as to their
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existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or prefeasibility studies, except in rare cases. U.S. investors are cautioned not to assume that part or all of an inferred resource exists, or is economically and legally mineable.
The mineral reserve and mineral resource estimates contained in the following tables have been prepared in accordance with the Canadian Securities Administrators’ National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”). Although generally the NI 43-101 standards are similar to those used by the United States Securities and Exchange Commission’s (“SEC”) Industry Guide No. 7, the definitions in NI 43-101 differ in certain significant respects from those under Industry Guide No. 7. Accordingly, mineral reserve and mineral resource information contained herein may not be comparable to similar information disclosed by U.S. companies.
The Company’s Global Reserves and Resources are summarized in the table below at December 31, 2009.
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Reserves | 2008 | 2009 | ||||||||||||||||||||||||
Property | Reserve Category | Tonnes | Gold Grade (g/t) | Contained Gold (oz) | Tonnes | Gold Grade (g/t) | Contained Gold (oz) | |||||||||||||||||||
Bong Mieu Gold Property(1) | Proven | 0 | — | 0 | — | — | — | |||||||||||||||||||
Probable | 289,000 | 2.90 | 26,900 | 254,627 | 2.72 | 22,236 | ||||||||||||||||||||
Total P&P | 289,000 | 2.90 | 26,900 | 254,627 | 2.72 | 22,236 | ||||||||||||||||||||
Phuoc Son Gold Property(2) | Proven | 235,650 | 8.72 | 66,070 | 205,053 | 6.53 | 43,031 | |||||||||||||||||||
Probable | 694,740 | 7.48 | 167,080 | 675,316 | 7.21 | 156,591 | ||||||||||||||||||||
Total P&P | 930,390 | 7.79 | 233,150 | 880,369 | 7.05 | 199,622 |
Resources | 2008 | 2009 | ||||||||||||||||||||||||
Property | Resource Category | Tonnes | Gold Grade (g/t) | Contained Gold (oz) | Tonnes | Gold Grade (g/t) | Contained Gold (oz) | |||||||||||||||||||
Bong Mieu Gold Property(3) | Measured | 1,071,900 | 2.13 | 73,400 | 973,660 | 2.02 | 63,080 | |||||||||||||||||||
Indicated | 2,511,600 | 1.75 | 141,310 | 2,257,640 | 1.66 | 120,545 | ||||||||||||||||||||
Total M&I | 3,800,200 | 2.13 | 260,010 | 3,231,300 | 1.77 | 183,624 | ||||||||||||||||||||
Inferred | 4,739,800 | 1.40 | 213,340 | 4,729,320 | 1.40 | 212,930 | ||||||||||||||||||||
Bong Mieu Ancillary Metal Credits(7) | Measured | 32,340 | 24,647 | |||||||||||||||||||||||
Indicated | 52,380 | 39,915 | ||||||||||||||||||||||||
Total M&I Credits | 84,720 | 64,562 | ||||||||||||||||||||||||
Inferred credits | 85,390 | 65,110 | ||||||||||||||||||||||||
Bong Mieu (Historic Nui Kem u/g) (3.3) | Measured | 24,200 | 5.00 | 3,890 | 24,200 | 5.00 | 3,890 | |||||||||||||||||||
Indicated | 192,700 | 6.60 | 40,890 | 192,700 | 6.60 | 40,890 | ||||||||||||||||||||
Total (M + I) | 216,900 | 6.42 | 44,780 | 216,900 | 6.42 | 44,780 | ||||||||||||||||||||
Inferred | 1,220,000 | 8.00 | 313,792 | 1,220,000 | 8.00 | 313,792 | ||||||||||||||||||||
Phuoc Son Gold Property(4) | Measured | 163,320 | 12.76 | 67,000 | 132,964 | 10.28 | 43,933 | |||||||||||||||||||
Indicated | 546,350 | 10.16 | 178,470 | 527,571 | 9.92 | 168,204 | ||||||||||||||||||||
Total M&I | 709,670 | 10.76 | 245,470 | 660,535 | 9.99 | 212,137 | ||||||||||||||||||||
Inferred | 1,884,200 | 6.63 | 401,640 | 1,878,685 | 6.63 | 399,017 | ||||||||||||||||||||
Tien Thuan Gold Property(5) | Project at initial exploration stage, no resource estimate conducted at date of publication | |||||||||||||||||||||||||
Bau Gold Property(6) | Resource in the process of being converted from JORC to NI 43-101 - results not available at date of publication |
Global Totals: | 2008 | 2009 | ||||||
Total Proven & Probable Reserves Contained Ounces | 260,050 | 221,858 | ||||||
Total Measured & Indicated Resource Contained Ounces | 505,480 | 395,761 | ||||||
Total Inferred Resource Contained Ounces | 614,980 | 611,946 | ||||||
Total Measured & Indicated Ancillary Metal Credit Contained Ounces | 84,720 | 64,562 | ||||||
Total Inferred Ancillary Metal Credit Contained Ounces | 85,390 | 65,110 | ||||||
Total Historic Measured + Indicated Resource Contained Ounces | 44,780 | 44,780 | ||||||
Total Historic Inferred Resource Contained Ounces | 313,792 | 313,792 |
* | Measured and Indicated Resource Estimates Includes Proven and Probable Reserves | |
(1) | Bong Mieu reserves were estimated by Olympus in accordance with Canadian National Instrument NI 43-101 and the Council of the Canadian Institute of Mining, Metallurgy and Petroleum definitions & standards and were independently reviewed by Terra Mining Consultants and Stevens & Associates (“TMC/SA”) in March 2009. Copy of the TMC/SA technical report entitled “Updated Technical Review of Bong Mieu Gold Project in Quang Nam Province, Vietnam”, dated April, 2009 can be found in the Company’s filings at www.sedar.com. Deposit notes and 2009 reserve impairments are as noted below: | |
1.1 Ho Gan Deposit-Lower and upper grade-cutoffs are 0.80 g/t Au and 10.00 g/t Au respectively. The mining dilution factor is 10% @ 0.30 g/t Au. | ||
No new reserves were developed during 2009. Accordingly, the remaining reserve was estimated by deducting the tonnage mined during 2009 from the official reserve remaining at YE 2008. The tonnage mined during 2009 was estimated by reconciling the tonnage (by truck count) with mill tonnage (by weightometer). | ||
1.2 Ho Ray-Thac Trang Deposit —No reserves have yet been estimated. | ||
1.3 Nui Kem Deposit —No reserves have yet been estimated. | ||
(2) | Dak Sa (Bai Dat and Bai Go Sector) reserves were estimated by Olympus (based on a 3.00 g/t Au stope cut-off, practical stope layouts and the application of appropriate mining dilution rules and minimum width criteria) in accordance with Canadian National Instrument NI 43-101 and the Council of the Canadian Institute of Mining, |
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Metallurgy and Petroleum definitions & standards. This estimate was independently audited by Terra Mining Consultants and Stevens and Associates (“TMC/SA”) in March 2008. This TCM/SA report entitled “Technical Report on the Phuoc Son Project in Quang Nam Province, Vietnam"(March 2008), is within Company filings at www.sedar.com. Deposit notes and 2009 reserve impairments are as noted below: | ||
2.1 Bai Dat Sector | ||
During 2009, ore was mined from Bai Dat, but no new (NI 43-101 status) reserves were developed. The 2009 reserve was therefore determined by deducting the ore mined during 2009 from the 2008 YE reserve. The ore mined during 2009 was determined by underground survey reconciled with the official milled tonnage (by weightometer). The 2008 reserve employed a lower grade-cutoff of 3.00 g/t Au and an upper cutoff of 100.00 g/t Au. | ||
2.2 Bai Go Sector | ||
During 2009, no mining was conducted and no new (NI 43-101 status) reserves were developed. Accordingly, the 2009 reserve remains the same as the YE 2008 reserve (at a lower grade-cutoff of 3.00 g/t Au and an upper cut of 80.00 g/t Au). | ||
(3) | Bong Mieu resources were first estimated by Olympus (in accordance with National Instrument NI 43-101 and the Council of the Canadian Institute of Mining, Metallurgy and Petroleum definitions & standards) and independently audited/updated by Watts Griffis and McOuat (WGM) (“A Technical Review of the Bong Mieu Gold Project in Quang Nam Province, Vietnam”), in September 2004, by Terra Mining Consultants and Stevens & Associates (“TMC/SA”) (“Technical Review of the Bong Mieu Gold Project in Quang Nam Province, Vietnam”) in August 2007 and by TMC/SA (“Updated Technical Review of Bong Mieu Gold Project in Quang Nam Province, Vietnam”) in March 2009. Copies of these reports can be found within Company filings at www.sedar.com. Deposit notes and 2009 resource impairments are as noted below: | |
3.1 Bong Mieu Central (Ho Gan) Deposit | ||
During 2009, no new (NI43-101 status) resources were developed. The 2009 resource was therefore determined by deducting the ore mined during 2009 (refer above) from the 2008 YE resource . | ||
3.2 Bong Mieu East (Ho Ray-Thac Trang) Deposit | ||
During 2009, no new (NI43-101 status) resources were developed. The 2009 estimate therefore remains the same as at YE 2008. The 2008 estimate incorporated drilling completed by Olympus during 2008 (using upper and lower grade cutoffs of 0.5 g/t Au and 10 g/t Au respectively) to update prior NI43-101 and CIMM standard estimates/audits, as independently reviewed by TMC/SA in March 2009 (refer above). | ||
3.3 Bong Mieu South (Nui Kem) Deposit (Historic Resource) | ||
The most recent independent estimate of the Nui Kem underground resource was by Continental Resource Management Pty Ltd (CRM) in 1993, in accordance with JORC (1989) standards. This estimate used lower and upper grade-cutoffs of 3.00 g/t Au and 30.00 g/t Au respectively. Although this CRM estimate pre-dates NI 43-101, it was independently reviewed by Watts, Griffis and McOuat (“WGM”) in 1997 and again in 2007 by TMC/SA (refer above). | ||
Neither WGM nor TMC/SA audited the CRM estimate, nor did they attempt to reclassify the Nui Kem resource to meet NI43-101 standards. Nonetheless, both independent consultant groups consider it to have been carried out in a manner consistent with standard industry practice of the time and deem it to be relevant and of historic significance. It is accordingly herein reported as a historical resource. | ||
During 2009, Olympus produced a total of 41,316 tonnes of ore grading 5.94 g/t Au from stoping and underground exploration developments. Although depth considerations effectively preclude exploratory drilling from surface, it is anticipated that underground drilling and exploratory headings will generate sufficient data to enable a NI 43-101 compliant estimate to be prepared at some time in the future. The CRM 1993 resource is not considered to be a “current” resource and should not be relied upon pending re-estimation to current NI43-101 standards. | ||
(4) | The Phuoc Son resources were first independently reviewed by Watts, Graffis and McOuat Limited. Copy of their report entitled “A Technical Review of the Phuoc Son Gold Project in Quang Nam Provience, Vietnam”, dated January 30, 2004, can be found in the Company’s filings atwww.sedar.com. Dak Sa (Bai Dat and Bai Go Sector) resources were estimated by Olympus in January 2008, in accordance with National Instrument NI 43-101 and the Council of the Canadian Institute of Mining, Metallurgy and Petroleum definitions & standards. This estimate was independently reviewed by TCM/SA in a technical report entitled “Technical Report on the Phuoc Son Project in |
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Quang Nam Province, Vietnam”, dated March 2008, copy of which can be found in the Company’s filings at www.sedar.com. Deposit notes and 2009 resource impairments are as noted below: | ||
4.1 Dak Sa South (Bat Dat) Deposit | ||
During 2009 ore was mined from Bai Dat, but no additional (NI43-101 status) resources were defined. Accordingly, the YE 2009 resource estimate (which includes mining reserves) was determined by impairing the 2008 resource by 2009 mining depletion (refer above). The 2008 estimate employed lower and upper grade cutoffs of 3.00 g/t Au and 100.00 g/t Au respectively. | ||
4.2 Dak Sa North (Bai Go) Deposit | ||
During 2009, no mining was conducted and no additional (NI43-101 status) resources were defined. The 2009 YE resource estimate (which includes mining reserves) accordingly remains as at YE 2008. The 2008 estimate employed lower and upper grade cutoffs of 3.00 g/t Au and 80.00 g/t Au respectively. | ||
(5) | No Tien Thuan resource is disclosed in 2009 because an estimate (to NI43-101 standard) is yet to be conducted. A historic (1993) gold resource estimate by the Geological Survey of Vietnam cannot presently be disclosed because it is neither JORC nor NI43-101 compliant. It is contemplated that drilling by Olympus during 2010 may enable an NI43-101 standard estimate by year end 2010. | |
(6) | The 2009 estimate of Bau resources is not disclosed because the estimate to NI43-101 standard is still in progress. The Bau mineral property was acquired from Zedex Minerals Ltd in January 2010. At that time, the property was attributed with a resource that had been estimated to Australian (JORC) standards by consultants to Zedex Minerals Ltd. Olympus is presently having those resources independently verified and converted to the equivalent Canadian standards pursuant to NI43-101 and CIMM guidelines by independent consultants Terra Mining Consultants and Stevens Associates of New Zealand. This work is presently ongoing. When complete, the new resource estimate will be separately announced and the related technical report will be included within the company filings on www.sedar.com. | |
(7) | The gold-equivalent value of the Tungsten in the Bong Mieu East Resource was calculated using Tungsten value of US$200/MTU ($210 in 2008) and gold value of US$1100/oz ($880 in 2008) . Other metals, such as silver, copper, lead, zinc and fluorine, have not been included in the 2009 estimate because they are of insignificant value or are uneconomic to recover. | |
(8) | The mineral reserve and mineral resource estimates contained in the above table have been prepared in accordance with the Canadian Securities Administrators’ National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”). Although generally the NI 43-101 standards are similar to those used by the United States Securities and Exchange Commission’s (“SEC”) Industry Guide No. 7, the definitions in NI 43-101 differ in certain respects from those under Industry Guide No. 7. Accordingly, mineral reserve and mineral resource information contained herein may not be comparable to similar information disclosed by U.S. companies. The diluted reserve estimates were first prepared by Olympus Staff in January 2008 and validated by Terra Mining Consultants and Stevens and Associates (“TMC/SA”) in March 2008. These estimates were both prepared in accordance with National Instrument NI 43-101 and the Council of the Canadian Institute of Mining, Metallurgy and Petroleum definition standards. The reserve estimates are based on a 3 g/t Au stope cut-off, practical stope and ore development layout and the application of appropriate dilution factors. | |
(9) | Commodity prices used over the last three years (in USD) were as follows: |
Commodity | 2007 Price | 2008 Price | 2009 Price | |||
Gold | US$700/oz | US$880/oz | US$1,120/oz | |||
Tungsten | US$250/MTU | US$210/MTU | US$150/MTU |
The 2008 - 2014 gold metal price forecasts used were those of Macquarie Bank (consistent with near term trailing gold price averages and the January 2008 Reuters poll), as follows: |
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YEAR | GOLD PRICE (US$) | |||
2008 | 960 | |||
2009 | 1050 | |||
2010 | 1000 | |||
2011 | 900 | |||
2012 | 800 | |||
2013 | 750 | |||
2014 | 750 | |||
2015 | 750 |
(10) | The Company currently operates three mines (Bong Mieu Central, Bong Mieu Underground and Phuoc Son), company ownership of which is 80% at Bong Mieu and 85% at Phuoc Son. The quantities disclosed relate to the whole mines. | |
Minor differences between estimated reserves and actual production have been accounted for in the respective reserve tables. There are no material variations to be disclosed. | ||
The Phuoc Son processing plant is yet to be constructed. Once steady-state metallurgical recovery has been achieved, metallurgical recovery factors for this mine will be reported by year-end average. | ||
An independent financial analysis of the Phuoc Son Deposit was conducted in 2008 by Mr John Glen of Meridian Capital Group Pty Ltd. | ||
The metallurgical recovery factor used was 90%, with sensitivity analyses at: +5%, -5% and -10%. |
4D.1 Phuoc Son Gold Property
Olympus Pacific currently holds an 85% interest in the Phuoc Son Gold Project with a focus of exploration, development and production of gold and other potential minerals in the specified project area, located in Phuoc Son and Nam Giang districts in the Quang Nam Province. In 2003, the Company’s subsidiary, New Vietnam Mining Company (“NVMC”), entered into a joint venture with Mien Trung Industrial Company (“Minco”), a mining company controlled by the local provincial government, to form the Phuoc Son Gold Company (“PSGC”). PSGC has an investment license on the Phuoc Son property. NVMC’s initial interest in the PSGC is 85% and Minco has a 15% interest. After five years, from the end of the period in which PSGC makes a profit for 12 consecutive months, Minco can increase its interest by 15% to 30% if Minco chooses to acquire such interest from NVMC by paying fair market value. After 20 years, Minco can increase its interest to a total of 50% if Minco chooses to acquire such additional 20% interest from NVMC by paying fair market value. Fair market value shall be determined by using an independent accounting firm to perform the fair market value assessment and that assessment will be considered final and binding for both parties. If Minco does not proceed on exercising its right of acquisition within three months from the dates of entitled acquisition, Minco will be considered as having waived its right to acquire the interest. If any party fails to contribute, by way of debt or equity, in proportion to its participating interest or defaults on any other substantial obligation under the agreement and such default is not rectified within 60 days of notice of default, the non-defaulting party can terminate the agreement or serve notice on the defaulting party which would result in the participating interest of each party being recalculated and adjusted based on the percentage of debt and equity contributed by each party when compared to the total debt and equity contributed by both parties.
On March 1, 2004, the Company entered into a Vend-in Agreement and on June 21, 2004 an Extension of Vend-in Agreement with Ivanhoe Mines Ltd and Zedex Limited (the “vendors”) to
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acquire the remaining interests held by the vendors in NVMC. The Company issued a total of 13,483,113 shares to acquire the NVMC interest. As a result of these agreements, the Company owns 100% of NVMC. NVMC owns 85% of the Phuoc Son Gold Project resulting in the Company holding an 85% interest in the Project. Upon closing of the Vend-in Agreement, the original joint venture agreement dated September 11, 1997 between Olympus, Zedex Limited and Ivanhoe Mines Ltd. was terminated. Post closing, each vendor has the right to nominate two directors as long as each vendor holds 15% or more of Olympus’ issued and outstanding shares as at the record date for the annual general meetings. If the ownership of Olympus’ outstanding shares drops below 15% but remains above or equal to 10%, the right exists for one director to be nominated. If ownership is below 10%, there is no obligation to include a nominee for director from a vendor. In June 2004, the Company acquired the remaining 42.82% of the outstanding shares of NVMC from Zedex and Ivanhoe. The Company completed the acquisition by issuing 13,483,133 common shares of which 3,205,467 shares were received by Zedex and 10,277,646 shares were received by Ivanhoe. As at March 9, 2009, Ivanhoe held no Olympus shares and Zedex Minerals Limited (formerly Zedex Limited) holds approximately 30% of Olympus’ issued and outstanding shares. Consequently, only Zedex Minerals Limited has retained the right to nominate two directors and Olympus no longer has the obligation to include a nominee from Ivanhoe Mines Ltd.
At Phuoc Son, the Company holds an investment license covering a 70 square kilometres area and a mining license on the Dak Sa deposits. The Dak Sa Underground Project is currently comprised of two deposits, the North (Bai Go) and South (Bai Dat) deposits.
On March 7, 2007, the Company released updated resource estimates for Phuoc Son incorporating the results of drilling up to October 2006. On January 15, 2008, the Company released updated resource estimate for Phuoc Son incorporating the results of drilling up to October 2007. Exploration work to date has defined the “productive” Dak Sa shear deposit over a strike length of approximately five kilometers, expanded the Dak Sa resource base, and has confirmed that the mineralization remains open.
In January 2008 the Company was granted a two year Exploration License over a 42 square kilometres area in the Phuoc Son project area, in Quang Nam Province, Vietnam.
On March 26, 2008, the Company received a positive independent feasibility study “Technical Report on Feasibility Studies for the Phuoc Son Gold Project in Quang Nam Province, Vietnam”. (the “Technical Report”) authored by independent mining and geological consultants, Terra Mining Consultants/Services & Associates. The full text of the report is available on Sedar website. (www.sedar.com). The Technical Report confirmed the feasibility of the Company’s goal to design and construct an efficient and environmentally sound operation that will bring economic benefits to the region and the shareholders. In July 2008 the Company decided not to seek outside funding for the Dak Sa project. Instead, the Company began treating the ore at the Dak Sa project at Phuoc Son by treating at its Bong Mieu gold processing plant on a toll treatment basis.
On August 28, 2008 the Company received approval from the Vietnamese authorities to conduct a trial test of the toll treatment of Phuoc Son ore at its Bong Mieu plant. The Company commenced sourcing high-grade ore from the Phuoc Son mine in a trial trucking and toll treatment operation in August 2008. The trial treatment operation was carried out over three months. Based upon the results of this test, the Company applied to the Vietnamese authorities for a permanent trucking permit to source and toll treat high grade ore from Phuoc Son through the Bong Mieu Gold Plant, and a temporary permit was granted in February 2009.
In Mid September 2009 the Company was granted a trucking permit to truck ore from Phuoc Son to the Bong Mieu plant until December 2010.
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The company placed the Phuoc Son mine into commercial production effective October 1, 2009.
(a)Property Description and Location
The Phuoc Son Gold property, is located in the western highlands of Quang Nam Province, in central Vietnam, some 8 kilometres (14.5 kilometres by road) northwest of the small town of Kham Duc and approximately 90 kilometres (140 kilometres by road) southwest of the coastal city of Da Nang, the fourth largest city in Vietnam (see Figure 1).
To date, over 30 gold prospects have been identified within the 70 square kilometres project area. The most advanced prospects are in the Dak Sa sector. On May 18, 2005, Olympus announced the results of a positive independent preliminary assessment study completed by Micon International Limited (“Micon”) for the Dak Sa Underground Project which covers the South (Bai Dat) and North (Bai Go) deposits which lie about 1 kilometres apart and these two deposits, once developed and constructed into mines, will share the same infrastructure and expected to eventually be connected by an underground tunnel. There is no known commercially mineable mineral deposits on this property and there can be no assurance that a commercially mineable mineral deposit exists on the property.
On October 20, 2003, a 30-year investment license No. 2355/GP was granted for the Phuoc Son property covering 7,000 hectares. The license permits Minco and NVMC to establish a joint venture, Phuoc Son Gold Company Limited (“PSGC”), for a term of 30 years. PSGC has investment capital of $10,000,000 and legal capital of $3,000,000, of which NVMC contributed $2,550,000 (85%) and Minco contributed $450,000 (15%). PSGC must pay the Vietnamese government annual land rent and annual corporate tax of 40% of net profit but will be exempt from import duties and is subject to 7% tax upon remittance of profits abroad. Minco has not contributed to the legal capital and Minco has chosen to defer its rights to receive its share of the distributions of profits until its contribution to legal capital is recovered in full. Minco is not planning to pay its legal contribution. Minco will not receive their entitled share of profits until their legal capital portion has been recovered, after which Minco will start receiving their share of profits. Legal capital recorded for PSGC of $2,550,000 is equal to what has been contributed. The Company and NVMC are not required to contribute Minco’s share of the legal capital.
On January 23, 2006, a Mining License application was granted over the South and North deposits. The Mining License allows the Phuoc Son Gold Company Ltd. within a 5.5 year period from date of grant to construct the mine and perform mining activities. The Company is in the process of obtaining the construction license and the import license for mining equipment for the Phuoc Son Gold property. In January 2008, PSGC obtained a new exploration license with a term of two years which will allow exploration activities in the specified areas. Under the Vietnamese law, an exploration license is required to get a newer amended mining license. Refer to risks outlined under Item 3D.
On December 31, 2008, Phuoc Son Gold Company obtained the renewed annual gold export certificate to allow for exportation of any dore that is produced by the Company that will be refined and sold offshore, which expired on December 31, 2009. A renewed annual gold certificate expiring 31 December 2010 was obtained on 31 December, 2009.
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Figure 1 shows the location of the property.
Figure 2 shows the location of these deposits and the principal facilities on the property.
Figure 1. Phuoc Son Gold Property
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Figure 2. Project Site Plan for Bai Dat (South) and Bai Go (North) deposits
(b)Accessibility, Climate, Local Resources, and Infrastructure
Access to the Dak Sa Project area within the Phuoc Son property is by 140 kilometres of bitumen road from Da Nang to Kham Duc. From Kham Duc to the mine area is approximately 14.5 kilometres on a fairly poor dirt road. This access road will be upgraded during construction. The South and North gold deposits lie about one kilometres apart and are linked together via a dirt road.
The climate is sub-tropical with average monthly temperatures ranging from about 27°C in June to 20.5°C in December, although it is reported that temperatures may fall below 15°C in the cold season. Average annual rainfall is 2,762.5 mm with the maximum average monthly value of 763.8 mm, which occurs in October.
The minimum average monthly precipitation value is for February and measures 30.9 mm. Regionally, the relative humidity is high and reasonably consistent year round, ranging from an average of approximately 83% in April to 93% in November and December. Storms often occur in Quang Nam Province in September, October and November and cause heavy rain and strong wind with an average speed of 65 kilometres/hr and a maximum of approximately 140 kilometres/hr.
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The Phuoc Son Project is located in the central highlands, an area that is one of the poorest regions of Vietnam. The local economy is primarily subsistence agriculture although local ongoing highway construction has provided a source of employment. Artisanal mining is ongoing on the Property and while this activity has reduced from past periods it is not strongly discouraged by the government as it helps reduce unemployment and stimulate the local economy. Olympus is doing its best to keep this activity in check and has good relations with the miners. These miners may be suitable candidates for future Olympus development and mining operations.
Nearby communities include Phuoc Duc Commune (population ~1,990) and Kham Duc District Town (population ~6,560), where Olympus has its local headquarters. Although Kham Duc has a district hospital with out-patient facilities and limited trauma casualty facilities, health care and education facilities are considered inadequate, with a distinct division in the standard of services and socio-economic opportunity available to ethnic minorities.
Electricity is provided from the Vietnam national grid supplying 1.6 MW at 22 kV supply. Telecommunications facilities are good and include internet and cell phone service. Water, although often polluted by the artisanal mining, is readily available on and near the Property. The population density within the Dak Sa Valley is approximately 25 per square kilometres2. Except for small-scale slash and burn agriculture, the topographic relief in the area of the project area is unfavorable for farming activities.
(c) | Geology |
Two major stratigraphic units are present on the Property as follows:
Kham Duc Formation (Proterozoic):This formation consists largely of sedimentary rock.
Avuong Formation (Paleozoic):This formation is distinctive as it hosts significant amounts of mafic volcanic rock types.
The most significant fault related to mineralization on the Property is the Dak Sa Fault Zone (“DSFZ”). The Dak Sa fault zone runs North-South for over five kilometres through the centre of the Dak Sa Prospect (host to the South (Bai Dat) and North (Bai Go) deposits). The DSFZ appears to be primarily a thrust fault and features prominent gold mineralized quartz vein/breccias.
(d)History of Exploration on the Phuoc Son Gold Property
In 1997 and 1998, Olympus Pacific Minerals became involved in the Phuoc Son project and took over direction of exploration programs from Indochina Goldfields Ltd. (subsequently Ivanhoe Mines Ltd.).
Since Olympus became directly involved in Phuoc Son in 1998 there have been several stages of exploration (carried out through and by NVMC). Selected portions of the property, including some safely-accessible artisanal underground workings, have been subjected to geological mapping, bedrock, float and channel sampling, soil geochemical surveying, magnetic surveying, self-potential geophysics and diamond drilling. The exploration stages are described as follows:
• | Stage 1 (October 1998 — March 1999): reconnaissance surveying of the then 100 square kilometres license area, identification of the three major mineralized shear structures, and commencement of detailed exploration over the first of these structures (the Dak Sa shear zone); | |
• | Stage 2 (April 1999 — December 1999): continuation of detailed exploration over the southern end of the Dak Sa shear zone (including mapping/sampling and diamond drilling six holes at Bai Dat) and follow-up exploration at other sites (particularly at K7) within the balance of the license area; |
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• | Stage 3 (January 2000 to June 2000): grid soil sampling in the Dak Sa & K7 shear zones, rock sampling, geological mapping, pan concentrate survey, diamond drilling of 29 holes at Bai Dat, Bai Cu, Bai Chuoi and Bai Go, within the Dak Sa shear zone; | |
• | Stage 4 (July 2000 to December 2000): detailed geological mapping, nine square kilometres soil survey north of Bai Go, rock geochemistry, petrology and diamond drilling of 17 holes at Bai Dat, Bai Cu, Bai Chuoi and Bai Go; | |
• | Stage 5 (January 2001—December, 2001): continuation of drilling with 31 additional holes at the Bai Go, Bai Gio and Bo prospects, as well as geological mapping, rock and soil geochemistry, pitting, surface and underground channel sampling, petrology, and gridding at other prospects including K7, Hoa Son, Tra Lon, Suoi Cay, Vang Nhe, Khe Rin, Khe Do and Khe Cop; | |
• | Stage 6 (January 2002 to December, 2002): scout drilling at the Khe Rin, North Khe Do, Khe Do, Bai Buom, Tra Long and K7 prospects (32 drillholes), as well as pitting at Nui Vang, geological mapping/sampling, soil geochemistry, ground magnetometer surveying at Khe Rin-Khe Do and Bai Buom, reconnaissance mapping elsewhere, including Vang Nhe, Tra Long, K7 and Hoa Son; commencement of mine scoping studies at Dak Sa; and | |
• | Stage 7 (January 2003 to December 31, 2003): in-fill, step-out and geotechnical diamond drilling at Bai Dat, Bai Go, Bai Chuoi and Bai Cu (27 holes); preparation of mineral resource estimates for the Bai Dat and Bai Go deposits; continuation of the scoping studies. A diamond drilling program was completed at Bai Chuoi sector (between the Bai Dat and Bai Go deposits) and soil geochemical surveys were being conducted elsewhere on the property. |
As at December 31, 2003, accumulated deferred exploration costs were $3,320,716 and mineral properties was $904,605 for the Phuoc Son Gold Property
2004 Work
In 2004, deep C-horizon soil geochem, ground magnetic and radiometric surveying were completed at the South Bai Cu, Round Hill, Ca Creek, Dak Sa, North Dak Sa, Bai Gio East, Bai Gio North, Hoa Son, K7 East and Tra Long prospects. A small orientation SP (self potential geophysics), program was completed at Nui Vang prospect. Geological mapping was conducted at Dak Sa, Quartz Creek, South Bai Cu, Round Hill, K7 and Ca Creek prospects. A BLEG and stream sediment sample program was completed over the northern section of the Phuoc Son Investment Licence not covered by previous surveys. Diamond drill programs were carried out at Bai Cu (4 holes), Bai Chuoi (one hole), Round Hill (5 holes), Nui Vang (3 holes), K7 (3 holes), Bai Gio North (6 holes), and Khe Rin (7 holes), prospects. Two metallurgic drill holes were completed at Dak Sa — South Deposit (one hole), and North Deposit (one hole). A geophysical consultant from Canada visited the property and filtered/processed all previous magnetic data to facilitate improved anomaly resolution. Based on what management considered to be favorable results, exploration continued into 2005. During the year ended December 31, 2004, $1,095,335 was incurred on mineral properties for the Phuoc Son Gold Property, excluding the impact of the Vend- In transaction described in Item 4.D.1.
2005 Work
In 2005, Self Potential (SP), geophysical programs were completed over the Dak Sa sector, Hoa Son, Bai Gio North, Bai Gio East and Bai Cu prospects. Trenching and sampling at Bai Gio North and Bai Gio East was completed. Geological mapping was completed at Bai Gio North, Bai Gio East, Hoa Son and Bai Chuoi. Exploration diamond drilling programs were conducted at Bai Go North (one hole), North Deposit (9 holes), South Deposit (16 holes) and Bai Chuoi (3 holes). An intensive re-logging program was carried out on North Deposit drill core during the year, combined with structural studies and new drill sections prepared and reviewed for Dak Sa.
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Resource estimates were completed to update the South Deposit ore body, incorporating the results of the in-fill drill program. The results of exploration were favorable in 2005, especially in the Dak Sa area, resulting in further exploration work in 2006. During the year ended December 31, 2005, other capital expenditures of $1,805,607 were incurred for the Phuoc Son Gold Property.
2006 Work
As of December 31, 2006, the Company had completed 63 drill holes totalling approximately 11,330 metres, mainly focusing on the: North (Bai Go) Deposit, South (Bai Dat) Deposit, and other exploration holes on assorted priority targets in the Dak Sa area. These ongoing exploration activities resulted in additional positive drill results at Phuoc Son. Over the course of 2006, the North Deposit was significantly enlarged and now extends in excess of 900 metres in a north-south orientation. The drilling also confirmed that the deposit remains open for further expansion. In April 2006 resource estimates were updated internally by qualified persons using the original resource estimates audited by an independent engineering firm, as a base document. The April 2006 update was on the North Deposit ore body, incorporating the results of drilling to March 31, 2006. An in-house technical report was completed with respect to the North and South Deposits. An engineering firm was selected to complete an independent review of this technical report that would result in an issuance of a Form 43-101 Compliant Independent Technical Report. During the year ended December 31, 2006, other capital expenditures of $2,458,242 were incurred for the Phuoc Son Gold Property.
2007 Work
On January 15, 2008, the Company released updated resource estimates and exploration results at Dak Sa (VN 320). The Measured and Indicated (“M & I”) resources, based on drilling up to October 2007, were stated to be 600,260 tonnes at an average grade of 10.95 g/t for 211,325 ounces of gold. The M & I total is comprised of Measured Resources of 157,450 tonnes, grading 13.06g/t and Indicated Resources of 442,810 tonnes, grading 10.2g/t. Additional resources of 425,610 ounces are contained within the Inferred category (1,955,400 tonnes at 6.77 g/t). Reference is made to the technical report “Preliminary Assessment of the Phuoc Son Project” dated December 2007 posted onwww.sedar.com (under the Company’s filings) for further details.
For the year ended December 31, 2007, the drilling program at Phuoc Son completed 11,170 meters in 37 drill holes. During the year ended December 31, 2007, other capital expenditures of $5,064,000 were incurred for Phuoc Son Gold Company.
2008 WorkDuring 2008, the Company completed 22 drill holes totalling approximately 8,558 meters.
Exploration work has defined the “productive” Dak Sa shear deposit over a strike length of approximately five kilometers, expanded the Dak Sa resource base, and has confirmed that the mineralization remains open.
During the fourth quarter of 2008 work was undertaken to re-evaluate the Reserves and Resources in the Phuoc Son property following drilling programs completed earlier in the year. The Proven and Provable Reserve Estimates [“P&P”], based on drilling up to 31 December 2008, stands at 930,390 tonnes at an average grade of 7.79 g/t for 233,150 ounces of gold. Measured and Indicated [“M & I”] resources, based on drilling up to December 2008, stands at 709,670 tonnes at an average grade of 10.76 g/t for 245,470 ounces of gold. The M & I total is comprised of Measured resources of 163,320 tonnes, grading 12.76g/t and Indicated resources of 546,350 tonnes, grading 10.16g/t. Additional resources of 401,640 ounces of gold are contained within the Inferred category (1,884,200 tonnes at 6.63 g/t). Refer to 4.D. above for details.
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During the year ended 31 December, 2008, other capital expenditures of $4,630,344 were incurred for the Phuoc Son Gold Company.
2009 Work
During 2009, no exploration drilling was completed at the Dak Sa deposit. Work continued to re-evaluate the Reserves and Resources in the Phouc Son property following drilling programs completed in 2008.
During the year ended 31 December, 2009, Phuoc Son Gold Company spent $323,170 on property, plant and equipment acquisitions and $2,416,768 on other capital expenditures.
The Company placed the Phuoc Son mine into commercial production effective October 1, 2009.
(d)Mineral Occurrences
Since 1998 Olympus has discovered and/or explored 23 important showings on the Phuoc Son Property. The most significant of these are the South and North Deposits in the Dak Sa area of the property. Following are descriptions of these two significant discoveries and a table summarizing the others based upon the Company’s own work.
South Deposit (Bai Dat)
The South Deposit is located in the southern portion of the property along the Dak Sa zone. Exploration to date has delineated one main mineralized quartz vein. The vein varies in thickness from one metre to over ten metres. The mineralized quartz vein contains pyrite, pyrrhotite, galena, sphalerite, and native gold. The total sulphides vary from less than 1% to more than 60%.
The South Deposit mineralization remains undefined on the down-dip to the NW (although rising terrain indicates increased depth to target in this direction) and with additional exploration, additional resources could be identified.
North Deposit (Bai Go)
The North Deposit is some 1000 metres north of the South Deposit on the Dak Sa zone. Overall, the North Deposit quartz vein system has widths of up to 32 metres. The Au-Ag-Pb-Zn mineralization is primarily fracture controlled in quartz. Drilling has delineated a central high-grade zone. The 2006 drilling at the North Deposit has Reported results nearly extending the strike length of the North Deposit to over 900 metres and confirming that the deposit mineralization remains undefined further to the north and south. Ongoing drilling in 2007 will focus on continuing to enlarge the deposit as well as bringing the currently outlined exploration extensions to mineral resource status.
Other Phuoc Son Property Showings
The Phuoc Son property hosts approximately 23 other occurrences and further exploration is required to evaluate the economic viability. Four of these occurrences are located in the Dak Sa area and have significant exploration potential that could result in development.
(f) | Resource Estimates |
Refer to 4(D) Global Resource table for detail of mineral resource and ore reserves for the Phuoc Son Property.
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4D.2 Bong Mieu Gold Property
The Company holds Mining and Investment Licences covering 30 square kilometres within the Bong Mieu gold property area. The Investment Licence covers three deposits: Bong Mieu Central (an open pit - Ho Gan), Bong Mieu East (a potentially open-pittable deposit) and Bong Mieu Underground (an underground deposit) that was operated by the French from 1896 to 1941. Olympus acquired this project in 1997.
Olympus has been involved with the property since September 1997. Olympus acquired its interest in the Bong Mieu Gold Property in September 1997 by acquiring 100% of Bong Mieu Holding, Ltd. from Ivanhoe Mines Ltd. The Company has a 100% interest in Bong Mieu Holdings Ltd., which holds an 80% ownership interest in Bong Mieu Gold Mining Company Limited (“Bogomin”), a joint venture enterprise incorporated in Vietnam, which has surface rights on the Bong Mieu property. The other 20% of Bogomin is owned by two Vietnamese governmental organizations, MIDECO (10%) and Minco (10%).
The Company constructed the Bong Mieu Central open pit mine and associated infrastructure in 2005 and 2006, with commercial gold production starting in the fourth quarter of 2006. Current ore throughput at Ho Gan pilot plant is about 500 tons per day. Electric power for the plant is provided by the national grid with back-up power generation provided by the Company-owned generators which have the capacity to run the full operation. The main equipment utilized at the Bong Mieu Central open pit mine includes the following: ball mills, generators, assay lab equipment, lab flotation cell, crusher / conveyor system and Gekko Gold processing plant. The general manpower requirement at Bong Mieu is approximately 367 workers on average. Processing plant and lab maintenance routinely occurs with the operations.
The Company manages the exploration programs on the property on behalf of the joint venture. The property covers four known deposits, namely Bong Mieu Central (Ho Gan), Bong Mieu East (Ho Ray), Bong Mieu East (Thac Trang) and Bong Mieu Underground (Nui Kem), and several other mineralized occurrences. One property, Bong Mieu Central (Ho Gan), has proven and probable reserves resulting in the related mine construction and gold production.
Starting in 2005 and continuing into 2006, mine construction at the Company’s Bong Mieu Central Gold Mine (Ho Gan) was completed. After the initial gold pour in March 2006, it was determined that the process needed to be reconfigured. The logistic supply chain for importing equipment into Vietnam is lengthy and deliveries take six to eight weeks after order placement. Consequently, new equipment installation and resulting system optimization took place during the course of second and third quarters of 2006.
Production at the Bong Mieu Central plant (VN220) has steadily improved since commercial production began in October 2006 as a result of improved throughput levels, grades, and recoveries. Ongoing improvements have been made to increase recovery and capacity including the installation of a control monitoring system in the first quarter of 2007; and in the first and second quarter of 2007, installation of a third detoxification tank and absorption tank to scavenge gold in solution from the leach tails. The plant has been producing, on average, approximately 1,000 ounces per month since July 2007.
Mill throughput fell three percent in the fourth quarter of 2007 compared to the third quarter of 2007 due to a ball mill motor failure, power outages, and high levels of rainfall in October 2007. Recoveries were also lower in the fourth quarter due to changes in the ore type being processed. As a result of lower throughput and recoveries in the fourth quarter 2007, gold production was 8.6 percent lower than the third quarter of 2007. A total of 9,198 ounces of gold were sold for proceeds of US$6,996,257 during 2007.
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The plant was designed as a gravity/sulphide flotation circuit and the main cause of the fluctuating recovery is a result of the degree of oxidization in the ore feeds. Oxidized ores do not float well and reduce recovery. To mitigate this problem, the mine has blended the ore to obtain a higher recovery. The Company also installed a Falcon concentrator to help improve recoveries. It is anticipated that, in the future, the tailings will be reworked.
The carrying value of the mineral property and rights and deferred development costs related to the Bong Mieu Property, is approximately $2.6 million and $11 million respectively, as at December 31, 2009,and the carrying value of the property, plant, equipment and infrastructure for the Bong Mieu property is approximately $6.6 million. Current ore throughput at the Bong Mieu Plant is approximately 450 tons per day. Electric power for the plant is provided by the national grid with back-up power generation provided by the Company-owned generators which have the capacity to run the full operation.
At Bong Mieu Underground (“BM Underground”), an underground deposit mined in the 1940s, is fully permitted to mine and is located within one kilometre of the BM Central plant.
Exploration work to date has resulted in a significant new discovery in the east area of the property, Bong Mieu East (VN240), as well as a number of new surface showings. There is potential for additional discoveries and resource expansion based on work completed to date.
(a)Property Description and Location
The Bong Mieu property is located in the Tam Lanh Commune of the Tam Ky District, in the southeast corner of Quang Nam Province in central Vietnam. It is some 20 kilometres south of the provincial capital of Tam Ky which lies about 60 kilometres south of the city of Da Nang along Highway 1 (see Figure 3).
The Bong Mieu Central (Ho Gan) gold deposit is located some 2 kilometres south of the Bong Mieu camp and offices on the southern side of the Bong Mieu River. Figure 4 shows the location of the Ho Gan, Bong Mieu East (Ho Ray) and Nui Kem deposits and the other principal occurrences on the property.
The property is covered by a 25-year Investment License covering 3,000 ha granted in March, 1991. Two Mining Licenses (one on Ho Gan, the other on Nui Kem), a tailings area and a construction area (on the camp/office area), covering a total of 365 ha are located within the Investment License area.
The investment license, No: 140/GP dated March 5, 1991, permits two parties namely: MIDECO, a Vietnamese Company, and Covictory Investment Limited (“CIL”), based in Australia, to establish a joint venture in Vietnam named Bong Mieu Gold Mining Co. Ltd. (“Bogomin”). The joint venture has a term of 25 years starting from the date of issuance of the investment license and after 25 years, an application can be made for extension. The joint venture was to have investment capital of $13,200,000 and legal capital of $1,000,000, with MIDECO contributing $200,000 cash or “in-kind” being 20% of legal capital and CIL contributing the equivalent of $800,000 in foreign currency, equipment and expenditures to Bogomin. Bogomin is exempt from import duties for all materials, equipment and spare parts imported by Bogomin and the product of Bogomin is licensed for export and sale in Vietnam. Bogomin must pay a 3% net smelter return royalty to the Vietnamese government, pay specified rent of US $200 per hectare per annum for land, remit corporate profit tax equal to 18% of profits for the first five years of profit (after five years the tax rate will be determined but will not exceed 25%); however, Bogomin is exempt from corporate profit tax for the first two profit-making years. The joint venture profits shall be shared as follows: 10% for MIDECO, 10% for MINCO and 80% for CIL. At the remittance of profits abroad, CIL must remit 5% of profits as profit remittance tax. In an amendment to investment license No 140/GP, dated November 29, 1993, the assignment of all share capital, obligations, and rights of CIL in Bogomin to Bong Mieu Holdings Limited
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(“BMHL”) was approved. The license was also amended increasing the invested capital to $15,000,000. In a further amendment to investment license No 140/GP, dated June 9, 2005, the profit remittance tax was cancelled and the total invested capital was increased to $25,000,000 and legal capital was increased to $3,000,000 of which MIDECO contributes $600,000 of the legal capital in currency or in kind and BMHL contributes $2,400,000 in currency, materials, equipment and expenditures. This remained unchanged at December 31, 2008.
On July 22, 1992, Bogomin obtained a mining license to allow the mining of gold at the Bong Mieu gold mine whereby the total mining area is 358 ha including open pit area of 230 ha, underground mine of 100 ha and tailings area of 28 ha. The mining license has a term of 25 years starting at the date of the issuance of the investment license. Each year a mining report must be submitted to the Ministry of Heavy Industry and the State Mineral Resources Management Department.
On October 9, 1993, a Land Use certificate was issued to Bong Mieu Gold Mining Co. Ltd. by the People’s Committee of Quang Nam-Da Nang Province for the Bong Mieu gold mine. The certificate covers a 365 ha area of which 300 ha is gold mining land, 32.3 ha is waste dumping land and 2.7 ha is for basic construction. The Land Use Certificate has a term of 25 years from September 1992 to September 2017.
On December 31, 2008, Bong Mieu Gold Mining Company obtained the renewed annual gold export certificate to allow for exportation of any dore that is produced by the Company that will be refined and sold offshore, which expired on December 31, 2009. A renewed annual gold certificate expiring 31 December 2010 was obtained on 31 December, 2009.The Bong Mieu exploration license was granted on December 15, 2008. The Company had previously been engaging in exploration activities under the investment license. Under Vietnamese law, an exploration license is required in order to get new or amended mining licenses. The Exploration license term is two years.
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Figure 3: Bong Mieu Gold Property
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Figure 4: Ho Gan Mining Map
(b) Accessibility, Climate, Local Resources, and Infrastructure
Access to the Bong Mieu Project area is by 90 kilometres of bitumen road from Da Nang, via Tam Ky to Tien Phuoc. The Bong Mieu Central (Ho Gan) Mine is accessed from Bong Mieu via previously constructed dirt tracks. Some of these are heavily eroded in places but can easily be reformed by bulldozer and faced with rock to provide all weather access.
The monsoon tropical climate has temperatures varying from a high of 42°C in summer to 16°C in winter, although it is reported that temperatures may fall below 16°C in the cold season. Rainfall records from the weather station at Bong Mieu show an average annual rainfall of 4,086 mm over the 2 year (August 1993 to July 1995) with a minimum annual rainfall of 2,935 mm and a maximum annual rainfall of 5,265 mm. Generally, 80% of the total annual precipitation occurs within the wet season (September to December) with the greatest precipitation occurring in October. January through August are generally drier months, with less than 180 mm of precipitation per month and January to April are typically extremely dry. Regionally, the relative humidity is high and reasonably consistent year round, ranging from an average of approximately 83% in April to 93% in November and December.
Most of the Property is relatively rugged with steep slopes and valleys. Maximum elevation is approximately 500 metres above sea level. The flattest portion of the Property is cultivated but the remainder has second and third — growth forest.
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The Property is near the commune of Tam Lanh which comprises 10-12 villages and a population of between 5,000 to 10,000. The commune provides a medical clinic and primary schools. The local economy is based on agriculture although some employment is found in local construction and a small amount of artisanal gold mining, both on the Property and outside.
Electrical power via the national grid is close to the Property and reaches the villages. Water is available on the Property from the local rivers.
(c) Geology
The Bong Mieu property is situated in central Vietnam, 20 kilometres south of one of the main branches of the Phuoc Son Suture, which is probably one of the most important structural controls of gold metallogeny in central Vietnam.
Bong Mieu Central (Ho Gan Deposit)
The Ho Gan deposit is flat lying, occurs on surface over an area of 1000 metres by 800 metres and extends in most places to a known vertical depth of up to 15 metres. The gold mineralization is hosted within altered, intrusive rocks, breccias and quartz veins.
Bong Mieu East (Ho Ray Deposit & Thac Trang)
Mineralization is hosted by quartz veined and sulphide bearing skarn, granite gneiss and schists that dip moderately to the northeast.
Nui Kem
The mineralization is dominantly hosted by quartz-sulphide veins and shear zones contained within a sequence of altered sedimentary schists that dip shallowly to the south.
For the above three deposits, typical gold mineralization contains sulphides consisting primarily of pyrite and locally pyrhotite up to to 10%.
(e) | History of Exploration on Bong Mieu Gold Property |
From 1997 until late 2001 Olympus (which managed the project for Bogomin) carried out no work on the Property. During this period a small staff was employed to maintain a presence at the field office, to keep the Property secure and discourage artisanal mining as much as possible.
In mid-2002, Olympus renewed work at Bong Mieu. The Property database was reviewed, mapping and sampling carried out and historic Mineral Resource estimates reassessed, all in part by a geologist who had worked on the Property previously. A start was made on preparing updated JORC-compliant Mineral Resource estimates and recommendations were made for additional work.
In 2003, regional and property— scale geological mapping and geochemical rock sampling was completed. By the end of 2003, several areas were identified as meriting follow-up work.
As at December 31, 2003, accumulated deferred exploration costs were CAD$517,079 and mineral properties was CAD$3,944,000 for the Bong Mieu Gold Property.
2004 Work
Bong Mieu Central (Ho Gan Deposit)
Infill and delineation diamond drilling programs comprising 228 holes were undertaken on the Ho Gan deposit. The holes were drilled vertically, on approximately 25 metre centers to depths ranging from 5.0 to 36 metres. The objective of the drill program was to expand and/or define the limits of the deposit to enable detailed engineering of the pit outlines and the preparation of production schedules.
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The program was successful in extending the limits of the known mineralization as well as establishing the continuity of mineralization between the previously defined resource outlines in all three areas.
Bong Mieu East (Ho Ray Deposit & Thac Trang)
At Thac Trang immediately southeast of the Ho Ray deposit, a 15-hole program was completed in July 2004. It encountered encouraging results which management believed warranted additional exploration in 2005.
During the year ended December 31, 2004, other capital expenditures of CAD$2,847,014 were incurred for the Bong Mieu Gold Property.
2005 Work
Bong Mieu Central (Ho Gan Deposit)
New resource estimates were completed in March of 2005 for the Ho Gan open pit deposit following completion of the 2004 drilling and receipt of all results. The updated Ho Gan mineral resource estimates (using a 1.0 g Au/t lower cutoff and a 10.0 g Au/t top cut) are shown in 4D.2 (f). The development of the mine commenced with the construction of the plant, tailings dams and related infrastructure.
Bong Mieu Central
Three shallow exploration and condemnation holes 54 metres were completed. Engineering, metallurgical and environmental studies were successfully completed.
Bong Mieu East - Ho Ray Deposit, Thac Trang and Rung De Prospects
A diamond drilling program during the early part of 2005 continued to evaluate the Thac Trang discovery.
Nui Kem
Five widely spaced exploration holes were completed at the Nui Kem deposit located approximately 1.5 kilometres from the Ho Gan deposit. The drill program successfully confirmed the down-dip continuation of the main Nui Kem structure over a strike length of approximately 1.7 kilometres and to a depth of 250 metres below the deepest underground development level. The drill program resulted in expanding the structure.
During the year ended December 31, 2005, CAD$5,577,384 was spent on capital assets and CAD$2,794,000 was spent on other capital expenditures for the Bong Mieu Gold Property.
2006 Work
Exploration, infill and metallurgical drill programs continued in the Bong Mieu East area. Through December 2006, Olympus completed 66 drill holes totalling approximately 3,020 metres. Metallurgical test-work on representative Bong Mieu East ore types was conducted.
Preliminary exploration programs, including drilling, were initiated to evaluate the economic potential of two new prospects, Ho Gan East and Bong Mieu West. At the Nui Kem mine, the exploration decline portal was completed and the first 70 metres of the tunnel were developed.
During the year ended December 31, 2006, other capital expenditures of CAD$3,147,855 were incurred for the Bong Mieu Gold Property.
2007 Work
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As at December 31, 2007 Olympus had completed 15 drill holes totalling approximately 1,615 metres on the property. The bulk of the drilling was focused on the Nui Kem/Saro Hill areas (VN230) which host vein structures parallel to the main Nui Kem vein system.
On October 9, 2007, the Company reported increases to the mineral resources at the Bong Mieu Gold Property as outlined in a Technical Report prepared by Terra Mining Consultants and Stevens & Associates (“TMC/SA”). The full text of the report is available on the Sedar website: (www.sedar.com). Refer to the updated mineral resources estimates table in Item 4.D.2(f).
During the year ended December 31, 2007, other capital expenditures of CAD$1,870,000 were incurred for the Bong Mieu Gold Property.
2008 Work
During the 2008 year the Company completed 35 drill holes totaling approximately 5,062 metres on the property. The bulk of the drilling was focused on the Ho Ray, Nui Kem West and Dak Sa deposits.
Follow-up mapping at Suoi Tre, following a deep soil sampling program undertaken in 2007, confirmed the presence of a steep SE-dipping mineralized structure.
A program of consolidating the ground-based and remote sensing data was completed by Encom in the second quarter of 2008 and follow up field work was commenced in the third and fourth quarter of 2008.
In the first quarter 2008 the first ore targets were intersected at the Bong Mieu Underground Deposit. The holing of the decline development at the lowest level of the old mine was completed in the second quarter, which lead to partial development and stoping in the third quarter of 2008.
The Bong Mieu Exploration Licence No 2125/GP-BTNMT was received and registered with the DGMV in the fourth quarter of 2008.
During the year ended December 31, 2008, other capital expenditures of CAD$4,183,755 were incurred for the Bong Mieu Gold Property.
2009 Work
Mining and processing of ore from the Bong Mieu Central pit (VN220) was cut back in 2009 to allow more of the high grade Phuoc Son ore to be processed in the plant. Quantities were increased in the first and third quarters while trucking of Phuoc Son ore was not possible.
Development activities for the 2009 year comprise 333m of level drives and 194m of raises.
The supplement to Ho Gan Environmental Impact Assessment to include Nui Kem underground was replaced with Nui Kem Environmental Impact Assessment Report submitted to Department of Natural Resources on December 10, 2009. Formal inspection occurred early in the first quarter of 2010. All Environmental Impact Assessment amendments and requirements, as advised by the Department of Natural Resources, have been complied with and notice of formal approval is now awaited.
The Bong Mieu Underground project (VN230) was placed into commercial production on April 1, 2009.
During the year ended December 31, 2009, Bong Mieu Gold mining Company spent $1,088,427 on property, plant and equipment acquisitions and $1,906,778 on other capital expenditures.
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(f) | Main mineral occurrences |
Olympus is exploring the Bong Mieu project area for primary gold deposits. The majority of gold deposits and prospects on the property lie within the core and on both limbs of the Bong Mieu anticline. Mineralization at all locations, except that at Ho Ray, occurs within shears that host quartz+sulphide veins, brecciated quartz+sulphide+schist and/or sulphide bearing schist. The Ho Ray mineralization occurs within calc-silicate lithologies and underlying quartzite, biotite schist and gneiss. The mineralization has an apparent stratabound distribution. The most significant mineral occurrences on the property are the Ho Gan, Ho Ray and Nui Kem. Resource and reserve estimates for these deposits are summarized as following:
Ho Gan (Bong Mieu Central)
Gold mineralization is located within several closely stacked shallow dipping shears that host quartz+sulphide veins, brecciated quartz+sulphide+schist, and/or sulphide bearing schist (occasionally oxidized and carrying limonite/goethite). Some shears have demonstrated lateral extent to some 2 kilometres. The most common sulphide is pyrite. Galena and arsenopyrite also occur.
Much of the deposit outcrops or occurs shallowly beneath the surface and varies in thickness, with a maximum thickness of 11.6 m.
Ho Ray and Thac Trang (Bong Mieu East)
The Ho Ray and Thac Trang gold (plus minor sulphide) mineralization occurs within calc-silicate rocks.
The gold is often associated tungsten mineralization which occurs as scheelite.
Nui Kem (Bong Mieu Underground)
Gold mineralization is hosted by quartz+sulphide veins that occupy shears in the underlying quartz+feldspar+biotite schist and gneiss. They have been exploited over a strike length of some 2 kilometres and down dip for at least 350 m. The common sulphide minerals are pyrite, galena, sphalerite and lesser pyrrhotite. The veins vary in thickness up to 2.2 m and average 1.0 m.
The Bong Mieu property hosts five other gold occurrences that warrant additional exploration to determine economic viability. These occurrences are located in the Bong Mieu area and have significant exploration potential that could result in development.
(g) | Resource and Reserve Estimates |
Refer to 4(D) Global Resource table for detail of mineral resource and ore reserves for the Bong Mieu Property.
4D.3 Capcapo Property, The Philippines
The property is located north of the prolific Baguio-Mankayan Gold District. The project area has all the similar epithermal—porphyry gold characteristics as the Baguio Gold District but has remained virtually unexplored. Olympus’ partner on the property is Abra Mining and Industrial Corporation (“AMIC”). AMIC has been operating and exploring within Northern Luzon for over 40 years and provides Olympus with a local partnership in the Philippines.
On November 23, 2006, a Memorandum of Agreement and Supplement to Memorandum of Agreement [“MOA”] was entered into by AMIC, the Company and Jabel Corporation that allows the Grantee (defined as “Olympus Pacific Minerals Inc. and a Philippine national”) to acquire an option to earn a 60 percent interest in AMIC’s Capcapo mining tenement (the “Property”) located in the Province of Abra in the Philippines upon completing a specified level of expenditures on
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the property. At June 30, 2010, the joint venture terms were not finalized due to ongoing negotiations with the partners.
The MOA is a binding agreement that is conditional on the Company’s completion of a due diligence program to validate historical drilling information. Under the MOA, the parties will form a joint venture corporation (“Newco”) that will develop, manage and conduct mining operations on the Property. Newco and Jabel will become co-holders of the titles to the Property. Although Jabel’s name will remain on the Capcapo Property titles, Jabel’s only economic interest in the Property will be a royalty. Aside from the royalty, all of the Capcapo Property’s proceeds shall flow through Newco.
Upon full exercise of the option, Newco will be 40% owned by Kadabra Mining Corp. (“Kadabra”), 20% owned by a Philippine national that the Company will identify (“Philco”), and 40% owned by AMIC. Collectively, the 40% ownership of Kadabra and the 20% ownership of Philco in Newco represent the 60% interest in the Property that is subject of the MOA. Under Philippine law, foreign-owned entities can only hold up to 40% of a Mineral Production Sharing Agreement (“MPSA”).
Under the MOA, once the due diligence procedures are completed with the drilling information being validated and a formal agreement is signed, a cash payment of U.S. $200,000 is required to be made by the Grantee to AMIC. Six months after the signing of the formal agreement, the Grantee is required to issue the Company’s common shares to AMIC with a total value of U.S. $350,000, based on the average of the trading price of the Company’s common shares for the five trading days preceding the date of the signing of the formal agreement. Once the Grantee has spent U.S. $3 million on exploration and development work on the property, the Grantee will issue to AMIC further common shares of Olympus with a total value of U.S. $450,000 based on the average of the trading price of the Company’s common shares for the five trading days preceding their date of issuance. To earn the 60% interest, a cumulative spending of U.S. $6 million by the Grantee on exploration and development must occur by the end of the 5th year after the signing of the formal agreement. The Grantee earns a 20% interest after the first U.S. $1 million is spent, an additional 20% interest after an additional U.S. $2 million has been spent and an additional 20% interest after an additional U.S. $3 million has been spent. Once the 60% interest has been earned, a new joint venture company (“NEWCO-2”) would be formed of which the Grantee would hold a 60% interest. If the Grantee obtains less than the 60% interest, the Grantee would share in less than 60% of the results of the joint venture. One year after full commercial production is achieved on the property, a royalty would be paid to Jabel, the underlying title holder of the property, equal to either 3% of gross value of production or 6% of annual Profit of NEWCO-2, as defined in the agreement, whichever is higher. As at March 24, 2009, the joint venture terms are not finalized due to ongoing negotiations with the partners
Following the initiation of Community Consultation in accordance with Philippine laws in the fourth quarter of 2007 and the commencement in the first quarter of 2008 of a formal program of Free, Prior and Informed Consent, undertaken in conjunction with the National Commission on Indigenous Peoples (NCIP), all efforts in Capcapo area have concentrated on obtaining Community approval which is required before any further exploration can continue. At December 31, 2008, the formal report and community decision was still awaited from the NCIP.
(a)Property Description and Location
The Capcapo property is located in Abra Province approximately 85 kilometers north of the Baguio — Mankayan gold district which is estimated to have past production & current reserves/resources in excess of 60 million ounces gold.
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Figure 1Regional Setting
Figure 2Local Setting
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(b) Accessibility, Climate, Local Resources, and Infrastructure
The properties are accessible by road; some 36 km (Patok) and 45 km (Capcapo) southeast from Bangued, the provincial capital. Bangued is 409 road kilometres north of Manila. The Capcapo prospect is traversed by the main Abra-Kalinga road, however access is restricted to foot throughout most of the areas on both the Patok and Capcapo tenements. Old mine and drill access tracks are present, however these are generally heavily eroded. These could provide excellent vehicular access once they are rehabilitated.
The climate is tropical, with marked wet and dry seasons and seasonal exposure to typhoons.
The Capcapo project is in a rural setting, with only local village resources. Reticulated electricity is available and houses are available for rent.
(c) Geology and Main Mineral Occurrences
Included in the tenements is the Capcapo deposit, the Patok epithermal Au-Ag deposit and numerous other gold-copper showings which have received little or no exploration work to date.
(d) History of Exploration on Capcapo Gold Property
In the mid-1980’s, Gold Fields Asia Ltd based in Australia, completed trenching and 8 short holes in the Capcapo deposit area. Since drill core from this previous drilling was not available, Olympus, as part of it’s final due diligence, has re-drilled 3 of the previous holes (OYM holes 07-9 to 07-11). Surface trench results yielded an average grade of 4.54 g/t gold over 9,150 m2 area using a 0.5 g/t cut-off. Individual trench assays ranged up to 110 g/t gold. Olympus trench sampling has confirmed the previous assay values. OYM trench A assayed 6.8 g/t Au over 20 meters. Results from due diligence holes 07-9 to 07-11 have returned extensive gold — copper mineralization. Step-out drilling (holes 07-12 onwards) has extended the mineralized zone.
Total cumulative spending on this project as at December 31, 2008 was $865,779 which was capitalized to deferred exploration. At December 31, 2008 the full $865,779 of capitalized deferred exploration expenditure had been written off. Management considers this is a prudent measure given the political unrest in the Philippines and the economic uncertainty of world markets at present. No further work will be undertaken in the Capcapo area until the NCIP Report is received and negotiations over the Joint Venture Agreement are resolved. Discussions during the first half of 2010, however, suggest that an accord may shortly be reached.
(e) | Resource and Reserve Estimates |
There is no known commercially minable mineral deposit on the property.
4D.4 Bau Gold Project, East Malaysia
The Bau Gold Project comprises consolidated Mining and Exploration tenements that collectively cover more than 828 km2 of the most highly-prospective ground within the historic Bau Goldfield, in Sarawak, East Malaysia. Operating since 1864, this goldfield has estimated historic gold production of more than 3 million oz. gold and recorded production of 1.5 million oz. of gold. Regional analogy with goldfields across the border in Kalimantan suggests significantly greater remaining potential.
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As a result of the amalgamation with Zedex, the Company has a 50.05% controlling interest in and is the operator of the Bau Gold Project. The Company is in a joint venture agreement with a local Malaysian company. Under terms of the JV Agreement, Zedex paid the JV partner US$750,000, with a further US$250,000 becoming payable upon the JV partner fulfilling certain contractual obligations. A further $1M will become payable to the JV partner after the first full year of profitable gold production from one deposit (Jugan), which has been the subject of two previous mining feasibility studies. Pursuant to the JV, Olympus may earn majority interest by funding exploration up to “Decision to Develop”. The Company is responsible for financing 100% of project development and all exploration, development and capital is treated as loan funds, which are recoverable from future production profits.
(a)Property Description and Location
The project area is centered on the township of Bau, about 22 miles West South West from the port city of Kuching. Kuching is the state capital (population +300,000) and has an international airport and two deep water ports. The project area is serviced by a network of sealed roads.
Figure 1: Bau Gold Property
(b) Accessibility, Climate, Local Resources, and Infrastructure
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The area is of tropical climate; with annual rainfall in the order of 4000 mm. The highest rainfall months are between December and January, but with significant rainfall events possible all year round.
The morphology of the Bau area is striking. Tropical karst limestone blocks rise up to 350 m above peripheral lowland plain of 100 m to 150 m elevation.
Much of the area is covered by milled modified tropical rain forests, with sporadic Kampong style residential developments.
The Bau Project features excellent infrastructure, comprising regular and reliable international air services to Kuching from Kuala Lumpur, Singapore and Indonesia. There are two ports with good dock and storage facilities and main sealed trunk roads from Kuching for delivery of supplies, heavy plant and equipment to the plant site. There is excellent labor and engineering support services. Accessibility is easy with the exploration base being less than 20 minutes drive to the extremities of the project area. Roads within the project area connect all of the important gold mines. The area is serviced with power and water.
(c) Geology
Analysis of historical technical data and reprocessing of geophysical datasets coupled with detailed field work to date has revealed the existence of various mineralization styles and setting, each with the individual potential to host a multi-million ounce gold resource. Four relatively un-explored, large-scale mineralization styles are present, as follows:
Intrusive porphyry-gold and adjacent skarn deposits: Historic drillhole information and diagnostic surface exposures are indicative of significant mineralization, largely overlooked by previous workers.
Sediment hosted gold deposits (Carlin Style):The depth and lateral extent of a number of known near-surface deposits have not previously been tested.
Tectonic breccia hosted gold deposits:As evidenced by the Tai Parit mine, which closed in 1996, these structurally-controlled deposits are of elevated grade (> 9g/t Au) and of relatively non-refractory metallurgical character.
Epithermal quartz-carbonate vein deposits:Key exposures of low-sulphidation epithermal mineralization systems that lie within previously unexplored parts of the Goldfield.
(d) History of Exploration on Bau Gold Property
Historically, Bau Goldfield is considered one of the more important goldfields in South East Asia. Operating since 1864, this goldfield has recorded 1.5M oz of gold production. The total historic goldfield production is estimated to be more than 3.0 M oz of gold. During the early gold rush era (1850’s to 1890’s), more than 50 mines were scattered over an area of approx. 250 km2 were operated by Chinese miners; not only gold, but also antimony, mercury and native arsenic. The Borneo Company Ltd. introduced one of the world’s first commercial cyanide process in 1898 and successfully operated this until they ceased operations 1921, by which time they had produced 983,225 ounces of gold, including 438,000 oz from the Tai Parit Mine. From 1921 to the early 1980’s, many small mines were operated by local Chinese mining syndicates (“Kongsi”) until the early 1980’s when Bukit Young Goldmines SDN BHD (BYG) initially started re-treating tailings and later resumed open-pit mining, most notably at Taiton, BYG and Tai Parit Mines, producing close to a further 1.0 M oz of gold.
The Taiton and BYG mine sites currently remain part of the Bau JV, but the Tai Parit open-pit has since been flooded and returned to the local government as a scenic reserve. The remains of several process plants (including a CIP plant) remain on-site in various stages of dilapidation. An engineering evaluation is required to determine what may be salvageable for future use.
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Exploration to date has evaluated: (a) jasperoid mineralization in the Krian Sector, (b) epithermal veining, crackle breccia and skarn mineralization in the Juala West Sector, (c) quartz-calcite veining in the Taiton Sector, (d) carbonate replacement mineralization in the Say Seng Sector, (e) fault breccia mineralization in Bekajang Sector and porphyry-gold mineralization in the Sirenggok Sector. Gold resources in the Pejiru, Jugan and Sirenggok Sectors, BYG Tailings Sectors and adjacent structures have been block-modelled and estimated to NI43-101 status. Only minor work has to date been conducted on the regional tenements.
(f)Main Mineral Occurrences
The Bau resource comprises multiple deposits, all which remain open with potential for further expansion through continuing exploration. The deposits comprise several different mineralization styles and have to date been drilled only to shallow depth. Resource drilling to upgrade the bulk of the existing resource to measured and indicated categories and to test deeper and lateral extensions of mineralization will commence after completion of mine scoping studies. Recent exploration has also defined exciting new exploration targets; the drilling of which is scheduled to commence in the third quarter 2010.
(g)Resource and Reserve Estimates |
The central goldfield area has been the principal focus of exploration since commencement of the JV in November, 2006. An independent consultant commissioned by Zedex Minerals Limited when they held this mineral interest has formally established a gold resource which is currently in the process of being converted to NI43-101 resource. This comprises three near-surface deposits (Jugan, Pejiru and Sirenggok), with a subordinate contribution from auriferous tailings at the historic BYG Gold Mine. Potential for substantial additional gold resource has also been estimated (by independent consultant) in deposit extensions and closely adjacent zones. Other (as yet unexplored) potential remains within peripheral zones. All of the resource estimated deposits lie within granted “mining” tenements (i.e. either Mining Licences or Mining Certificates).
There is no known commercially minable mineral deposit on the property.
4D.5 Tien Thuan Gold Project, Central Vietnam
The Binh Dinh Provincial Government has granted an Investment Certificate to the Olympus subsidiary: Binh Dinh New Zealand Gold Company (BNG). Pursuant to the Investment Certificate, Olympus may earn 75 percent equity in the Tien Thuan Project, by funding exploration through to completion of a bankable feasibility study (such funding to be repayable from future profits). Upon reaching a “decision to mine”, project development will be jointly funded on a pro-rata basis.
(a)Property Description and Location
The Tien Thuan Gold Project lies some 50 km West of the port city of Quy Nhon in Binh Dinh Province in Southern Vietnam. The project area broadly encompasses about 100 km2 of hilly terrain containing numerous hard rock and alluvial gold occurrences, within and peripheral to a large, multiphase intrusive complex of predominantly felsic composition.
Prior exploration by the Vietnamese Geological Survey (DGMV) during 1990-93 recorded six sub-parallel, closely spaced quartz veins hosted by a granitic intrusive. DGMV assays revealed gold values ranging up to 157 g/t Au, with 35 percent of all samples reporting above 3.0 g/t Au.
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The company has since mapped and sampled three intrusive related vein-swarms, confirming the presence of multiple quartz veins of potentially economic grade and width.
Figure 1: Tien Thuan Gold Property
(b) Accessibility, Climate, Local Resources, and Infrastructure
The Tien Thuan Gold Project lies some 50 km West of the port city of Quy Nhon in Binh Dinh Province, Central Vietnam. The project is readily accessible from Quy Nhon City by sealed roads. The road distance from Quy Nhon city to Tien Thuan is about 80 km, via national road No 19 and provincial road 637 to Vinh Thanh District.
Binh Dinh Province is in the south of the central coast region of Vietnam, bounded by coordinates 13o30’-14o42’ N latitude and 108o35’-109o18’ E longitude. Quang Ngai Province lies to the North, Phu Yen to the south. The South China Sea lies to the east, and Gia Lai Province to the west. Binh Dinh provides the principal access routes to the western highland provinces.
The project area broadly encompasses about 100 km2 on the eastern side of the Song Con River Valley. The area is characterized as low to moderately mountainous; transitional between a mountainous region in the west (maximum 975m ASL), reducing to the fertile agricultural plains in the east (minimum 275m). A proportion of the project area (500-700m ASL) is characterised as rugged terrain with locally steep slopes (>250). At lower elevations, the slopes are generally of 10-15o. Narrow alluvial plains and terraces extend along the Song Con Valley floor.
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The climate in the region is characterised as humid-tropical monsoon. Temperature varies from 20 to 35oC and averages 26-28oC. The average annual precipitation is 1700-1800 mm. 70-80% of this falls in the rainy season (from August to December), at which time high rainfall events sometimes cause lowland flooding. The dry season begins from January and lasts for eight months, sometimes resulting in droughts. The average humidity is 75%.
The population of Binh Dinh is approximately 1,337,000 people (1993 census). Ethnic Kinh comprise 98.1% of the population, with three ethnic minorities (Cham, Bana, and H-re) living mainly in mountainous districts. The average population density is about 232 people/km2, but it is unequally distributed, with only about 20 people/km2 living in mountainous areas. 82.5% of the population live in rural areas, whilst 17% live in urban areas.
Primary forests have been completely removed by prior milling. The high country comprises secondary natural re-growth of scrubby character. Lowland slopes mostly comprise plantations (cashews, peanuts, paper trees, eucalypts, etc), whilst the valley floors are mostly occupied cultivated crops (rice, water melons, etc).
Binh Dinh Province has an area of 6,047 km2, with 134km of coastline. Quy Nhon City is the administration, economic and cultural centre. Regular freight and passenger services are provided by land, sea and air. The city is serviced by excellent deep water port facilities and by Phu Cat airport, which features regular air services on (American built) concrete runways, capable of accepting large aircraft.
National Highway No1, and the National (Thong Nhat) railway line both run N-S through Binh Dinh; providing access to Saigon to the South and Danang to the North. To the West, Binh Dinh is connected to the Highland Provinces of Gia Lai and Tay Nguyen by National road No19.
(c) Geology
Central to the project area, a sparsely outcropping mineralized granitoid intrusive (quartz monzonite porphyry) of probable Early Tertiary age has been partially delineated beneath shallow alluvium in a pronounced circular depression of some 4 km diameter. Rhyolites and felsites appear to dominate much of the peripheral terrain. Gold mineralization is intimately associated with quartz veins, which are locally associated with rhyolite dykes. Individual quartz veins locally exceed 20m width and 2km of strike. A major N-S trending structural corridor (featuring multiple quartz vein, stock-work and breccia bodies, associated with intensive zones of silicification and hydrothermal alteration) has been mapped more or less continuously along 12 km of strike (roughly tangential to the circular depression).
To the South east and East of the central granitoid outcrops, the country rocks mostly comprise fractured rhyolites and felsites, which appear to be re-crystallized and cut by numerous irregular quartz stringers. Although gross geological relationships have yet to be interpreted, it is presently conjectured that these exposures may represent a younger granitoid intrusive body (of perhaps batholithic extent) partially exposed beneath older rhyolites forming the batholith roof.
(d) History of Exploration on Tien Thuan Gold Property
Artisan gold mining has historically been widespread throughout the Tien Thuan area. Since the early 1990’s however, artisan mining has been strongly curtailed by the provincial authorities, mainly for social reasons and to prevent environmental degradation.
The first systematic exploration of the Tien Thuan area was conducted by the Vietnamese Geological Survey (DGMV) during 1990—93. This work included geological mapping, costeaning and pit sampling of quartz veins within artisan mining areas. Four separate gold resource areas were delineated. One of these (at Nui Bac Ma) was focused on six sub parallel, steeply dipping quartz veins, hosted within granitoid intrusives. DGMV assays revealed values ranging up to 157 g/t gold, with 35% of all samples reporting above 3.0 g/t gold.
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Following Provincial Government approval of the work programme, BNG commenced exploration in December 2007 with 1:5,000 scale geological mapping and 100m x 50m grid rock and soil geochemical surveys of the tenement area. During 2Q 2008, the sample spacing was reduced to 100m x 25m, in order to provide greater geochemical resolution within the main areas of interest. All assays were performed by TELARC registered laboratories.
In 3Q 2008, detailed (1:1,000 scale) geological mapping of individual veins and ore shoots commenced, preparatory to the specification of initial drill targets. Drilling is scheduled to commence late in the 3rd Quarter of 2008.
The above detailed field work has revealed extensive outcropping geological features that are broadly consistent with those of economically productive goldfields (a particularly close analogy has been drawn with Charters Towers Goldfield, Australia).
Based on results to date, the potential for upgrading the DGMV gold resource to JORC status and for expansion of this by drilling beneath the shallow artisan workings is considered excellent.
Reconnaissance mapping around the Tien Thuan periphery has also highlighted additional base-metal potential, particularly molybdenum (rock chip sampling has returned results of up to 1,431 ppm Mo).
As of June 2010, drilling was in progress on the Nui Bac Ma sector of the property, where approximately 11 strike-kilometres of auriferous quartz veins have been delineated. This is an initial programme of wide-spaced drilling, primarily designed to test the depth continuity of near-surface gold grades. Subject to positive results, close-spaced pattern drilling will be conducted to delineate an NI43-101 resource.
(e)Main Mineral Occurrences
Gold resources have previously been delineated (to pre-JORC status) within four Sectors of the Tien Thuan project area, whilst NBG exploration has since identified additional mineralization areas, as follows:
Nui Bac Ma
Nui Bac Ma, which is the principal focus of the current exploration effort, features a prominent hill with more than 350m of topographic relief. A large quartz vein-swarm transects the hill and is associated with coincident gold, silver, lead, zinc, arsenic and cadmium anomalies in both rocks and soil. The lead, zinc, arsenic and cadmium values show appreciable vertical zonation, whilst the gold values appear to remain consistent, irrespective of elevation.
Thanh Hoa
The Thanh Hoa vein swarm is parallel to the Bac Ma swarm and lies about 1 km to the east. At least one of this vein swarm appears to be mineralized over a strike length or more than 2km, with appreciable mineralization occurring within the hanging wall. Anecdotal artisan miner narratives suggest that the gold grade in this vein increases with depth.
Vinh Binh
The Vinh Binh vein swarm comprises one section of the prominent structural corridor that trends N-S from the Tien Thuan circular depression. The Vinh Binh veins are probably semi continuous (beneath alluvium of west flowing streams) with collinear vein sets within the northernmost (Hon Lap) sector of the N-S trending structural corridor.
Suoi Ha
The DGMV has estimated a (P1) resource at Suoi Ha (2 km to the east of Vinh Binh), but BNG has not yet conducted any detailed follow-up work at this location.
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Hon Lap
Hon Lap is collinear with Vinh Binh and is at the northern end of the structural corridor that trends N-S from the Tien Thuan circular depression. A Vietnamese company is currently operating a small-scale underground mine, which produces lead, zinc and pyrite-gold concentrates, primarily by floatation, using equipment of Chinese origin. Although reconnaissance by BNG has revealed float values of up to 20 g/t Au shedding from one of the main quartz veins, no substantive follow-up work has yet been undertaken.
Other Areas
Reconnaissance of other gold and base metal targets peripheral to the above areas has also continued to record positive indicators. These include a 1100m x 300m, open-ended (>20ppm) Molybdenum-in-soil anomaly coincident with the Tien Long dacitic intrusive and a large tungsten-molybdenum intrusive granite porphyry (peak value 1,400 ppm Mo) within an adjacent valley to the north.
(f)Resource and Reserve Estimates
The only mineral resources estimated to date within the Tien Thuan Gold Project area are those (measured in tonnes of gold) that were completed by the Geological Survey of Vietnam during the early 1990’s. Although these were estimated and classified by methods approved by Vietnamese authorities, they pre-date current standards..
There is no known commercially minable mineral deposit on the property.
4D.6 GR Enmore Gold Project, New South Wales, Australia
The Enmore Gold Project covers approximately 325km2 within the Enmore-Melrose Goldfield of northeastern New South Wales, Australia. The Company holds a 100 percent interest in two exploration licences covering 290km2and is earning an 80 percent interest in two exploration licences covering 35 km2.The geological setting is broadly analogous to that at the nearby Hillgrove copper gold mine.
Exploration results to date have confirmed the potential for lode and/or quartz stock-work style gold deposits at a number of individual prospects, including: Bora, Sunnyside, Lone Hand, Stony Hill, Sheba and Tabben. Potentially minable grades and widths have to date been drill-intersected at Sunnyside and Bora prospects. Further work is planned before a review report is presented to the Company’s directors.
(a)Property Description and Location
The Enmore Gold Project covers approximately 325km2 within the Enmore-Melrose Goldfield of northeastern New South Wales, Australia
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Figure 1: GR Enmore Gold Property
(b) Accessibility, Climate, Local Resources, and Infrastructure
The Enmore Project lies approximately 30 km south of the regional centre of Armidale in northern New South Wales, Australia. Armidale is serviced by sealed highways and by daily air services. Vehicle access to the property is by sealed rural roads. Access within the tenements is by farm tracks.
The climate is temperate, with marked seasonal variation. Winter temperatures can fall below freezing on the Enmore Plateau.
The Enmore Project is in a rural setting. Reticulated electricity is available at roadside and accommodation and field supplies are available from the nearby township of Armidale.
(c) Geology and Main Mineral Occurrences
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At Sunnyside diamond drilling demonstrated vertical continuity down to 118m and subsequent trenching through a strike length of 400m and width of up to 50m confirmed variable frequency stockwork mineralisation. However sampling grades away from the Sunnyside fault decrease significantly suggesting the bulk of the material is likely to be in the range of 1.5-2.5g/t Au oxide. Oxide mineralisation extents to a depth exceeding 50m towards the Sunnyside fault. There is limited information beyond the fault, but at least one footwall structure has been identified.
Drilling at Bora has confirmed a NE striking steeply plunging to the NW lode style vein system developed within an extensive mylonite zone comprising milled adamellite locally intensively altered to a quartz — sericite assemblage. Drilling to date has confirmed grade potential to 180m, but with the plunge component additional step out drilling is required. Given the occurrences of eluvial gold along the Bora fault its highly probable that further dilation zones hosting auriferous lodes exist between Bora and Red Hill (across a topographic divide).
(d)History of Exploration on Enmore Gold Project Property
Drilling and subsequent trenching over the Bora, Sunnyside and Sheba prospects has confirmed the potential for limited scale economic mineralisation in the order of 150-250,000oz. Of the three prospects Bora and Sunnyside appear to have the most upside potential, other prospects including Red Hill, Golden Gully and Stony Hill have generated some interesting results but there appears to be limited structural focus which is critical for shoot style lode development in this area. Very extensive trenching right through the Sunnyside stockwork zone was conducted to confirm the full strike and width of this mineralisation, the results confirmed additional drilling is required to close off the full strike extent of the mineralisation, however, this is unlikely add any significant additional ounces to the resource.
(e)Resource and Reserve Estimates
There is no known commercially minable mineral deposit on the property.
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PART II
ITEM 15:CONTROLS AND PROCEDURES
15.T.1 (a) Disclosure Controls and Procedures of the Company’s Chief Executive Officer
Based on an evaluation under the supervision and with the participation of the Company’s management, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, were ineffective as of December 31, 2009 to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
15T.2 (b)Management’s Annual Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
A company’s internal control over financial reporting includes those policies and procedures that:
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
It should be noted that a control system, no matter how well conceived or operated, can only provide reasonable assurance, not absolute assurance, that the objectives of the control system are met. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
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that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate.
Description and impact of material weakness
In November 2009 the Company identified errors in relation to the recognition of revenue from the Vietnam operations, the translation of opening balances from CAD to USD and the interpretation of the grant date of stock based compensation. As a result changes were made to the original filing for the second quarter of 2009 that were restated and refiled on November 12, 2009. In addition the Company has identified an error relating to the Canadian GAAP to US GAAP reconciliation for the year ended December 31, 2008. This error has been corrected in the financial statements for the year ended December 31, 2009 restated and refiled on July 14, 2010.
Management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2009. In making this assessment, management used the criteria set forth in the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its assessment, and in light of the items identified in the interim financial statements for the second quarter of 2009, and the Canadian GAAP to US GAAP reconciliation as described above, management has concluded that, as of December 31, 2009, the Company lacked sufficient personnel with the required experience and capabilities to complete all necessary control procedures associated with financial reporting and that the Company’s internal controls over financial reporting required modification and were considered ineffective in terms of National Instrument 52-109.
The errors that arose in the 2009 reporting required the Company to refile. This deficiency highlighted the possibility that a material misstatement would possibly not be prevented or detected on a timely basis.
Remediation Plan
Management has evaluated the need for additional resources to support the disclosure controls and financial reporting requirements within the organization and has appointed an experienced Group Controller and subsequent to year end appointed an Internal Control Coordinator to address the issue.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this annual report.
Changes in Internal Control over Financial Reporting
There were no changes in our internal controls over financial reporting during our fiscal year ended December 31, 2009 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting. However, because of the errors discovered in November 2009 described above inDescription and Impact of Material Weakness, in 2010 the Company adopted theRemediation Plan described above which was intended to correct the material weaknesses it believed existed in 2009 in its disclosure and financial reporting controls.
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19. Exhibits
1. | Reference is made to the 2007 20F Annual Report dated March 28, 2008 exhibit 1. Articles of Incorporation and By Laws | |
1.1. | Reference is made to the 2007 20F Annual Report dated March 28, 2008 exhibit 1.1 Certificates of Status, Amendment, Continuance | |
1.2. | Reference is made to the 2007 20F Annual Report dated March 28, 2008 exhibit 1.2 Bylaws as currently in effect. | |
2. | Instruments defining the rights of holders of equity — refer to exhibit 1 under 19B. | |
3. | Material Contracts |
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3.1. | Reference is made to the 2007 20F Annual Report dated March 28, 2008 exhibit 3.1 — Mining Permit — dated July 22, 1992 | |
3.2. | Reference is made to the 2007 20F Annual Report dated March 28, 2008 exhibit 3.2 — Right to Use Land Certificate — dated October 9, 1993 | |
3.3. | Reference is made to the 2007 20F Annual Report dated March 28, 2008 exhibit 3.3 — Investment License — No: 140 / GP, dated March 5, 1991 and Amendments | |
3.4. | Reference is made to the 2007 20F Annual Report dated March 28, 2008 exhibit 3.4 — Debt Finance Facility Agreement — dated February 8, 2006 | |
3.5. | Reference is made to the 2007 20F Annual Report dated March 28, 2008 exhibit 3.5 — Mining License No 116/GP —BTNMT — dated January 23, 2006 | |
3.6. | Reference is made to the 2007 20F Annual Report dated March 28, 2008 exhibit 3.7 — Investment License No. 2355/GP — dated October 20, 2003 | |
3.7. | Reference is made to the 2007 20F Annual Report dated March 28, 2008 exhibit 3.8 — Joint Venture Agreement — dated March 5, 2003. | |
3.8. | Reference is made to the 2007 20F Annual Report dated March 28, 2008 exhibit 3.9 — Agreement for Fulfilment of Contract, dated September 16, 2006 and cancellation of agreement on November 27, 2006. | |
3.9. | Reference is made to the 2007 20F Annual Report dated March 28, 2008 exhibit 3.9 — Memorandum of Agreement and Supplement — November 24, 2006 | |
3.10. | Reference is made to the 2007 20F Annual Report dated March 28, 2008 exhibit 3.9 — Stock Option Plan — September 12, 2003 | |
3.11. | Reference is made to the 2007 20F Annual Report dated March 28, 2008 exhibit 3.13 — Management service agreement with Momentum Resources International Pty Ltd. — dated July 16, 2005 and amendment dated January 28, 2008. | |
3.12. | Reference is made to the 2007 20F Annual Report dated March 28, 2008 exhibit 3.17 — Argor Heraeus Refining Contract — dated January 11, 2005 | |
3.13. | Reference is made to the 2007 20F Annual Report dated March 28, 2008 exhibit 3.18 — Dragon Equity and Debt Financing dated December 17, 2004 | |
3.14. | Reference is made to the 2007 20F Annual Report dated March 28, 2008 exhibit 3.19 — Assignment Agreement among Ivanhoe Mines Ltd., Zedex Minerals Limited, and Olympus Pacific Minerals, Inc. dated January 1, 2006 | |
3.15. | Reference is made to the 2007 20F Annual Report dated March 28, 2008 exhibit 3.20 — Certificate of Incorporation and Articles of Incorporation of Kadabra Mining Corp — May, 2007. | |
3.16. | Reference is made to the 2007 20F Annual Report dated March 28, 2008 exhibit 3.22 — Share Placement Documents dated March 19, 2007 | |
3.17. | Reference is made to the 2007 20F Annual Report dated March 28, 2008 exhibit 3.23 — Shareholders Rights Plan — dated June 25, 2007 | |
3.18. | Stock Option Plan — dated June 7, 2007. Reference is made to the Amended Annual Report on Form 20-F for the year ended December 31, 2008, dated February 3, 2010. | |
3.19. | Reference is made to the 2007 20F Annual Report dated March 28, 2008 exhibit 3.25 — Code of Ethics — September 19, 2006 |
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3.20. | Reference is made to the 2007 20F Annual Report dated March 28, 2008 exhibit 3.27 — Framework of Laos and Cambodia Joint Venture Agreement, July 17, 2007. | |
3.21. | Reference is made to the 2007 20F Annual Report dated March 28, 2008 exhibit 3.28 — Exploration License dated January 10, 2008 | |
3.22. | Reference is made to the Amended Registration Statement of Form 20-F-A dated June 29, 2007, submitted to the Securities and Exchange Commission on June 29, 2007 for exhibits 19B.1 — 19B.3.24. | |
3.23. | Reference is made to the Amended Registration Statement of Form 20-F-A dated July 13, 2007 for exhibit 19B3.25 and November 13, 2007 for exhibits 19B.3.26 and 19B.3.27. | |
3.24. | Reference is made to the 2008 20F Annual Report dated March 31,2009 exhibit 3.24 Management Service Agreement with Huong Le-Dao dated September 1, 2008. | |
3.25. | Reference is made to the 2008 20F Annual Report dated March 31,2009 exhibit 3.25 Employment Agreement with Thomas Rodney Pervical Jones dated January 1, 2008. | |
3.26. | Reference is made to the 2008 20F Annual Report dated March 31,2009 exhibit 3.26 Management service agreement with Orangue Holdings Limited, dated January 1, 2008 to provide the services of David Seton. | |
3.27. | Reference is made to the 2008 20F Annual Report dated March 31,2009 exhibit 3.27 Management service agreement with Action Management Limited, dated January 1, 2008, to provide the services of Charles Barclay. | |
3.28. | Reference is made to the 2008 20F Annual Report dated March 31,2009 exhibit 3.28 Management Service Agreement with Wholesale Products Limited, dated January 1, 2008, to provide the services of Peter Tiedemann. | |
3.29. | Reference is made to the 2008 20F Annual Report dated March 31,2009 exhibit 3.29 Management Service Agreement with Cawdor Holdings Limited, dated January 1, 2008, to provide the services of Russell Graham. | |
3.30. | Reference is made to the 2009 20F Annual Report dated July 15, 2010 exhibit 3.30 Management Service Agreement with Avora Limited as Trustee of Lloyd Beaumont Trust, dated January 1, 2010, to provide the services of Paul Seton. | |
3.31. | Reference is made to the 2009 20F Annual Report dated July 15, 2010 exhibit 3.31 Management Service Agreement with Whakapai Consulting Limited, dated January 1, 2010, to provide the services of S. Jane Bell | |
3.32. | Reference is made to the 2008 20F Annual Report dated March 31,2009 exhibit 3.30 Employment Agreement with James Hamilton dated January 1, 2008. | |
3.33. | Reference is made to the 2008 20F Annual Report dated March 31,2009 exhibit 3.31 Bong Mieu Exploration Licence No 2125/GP-BTNMT | |
3.34. | Reference is made to the 2008 20F Annual Report dated March 31,2009 exhibit 3.32 Gold Export Certificates — dated December 31, 2008 | |
3.35. | Reference is made to the 2008 20F Annual Report dated March 31,2009 exhibit 3.33 Addendum 3 to the Refining Contract of November 1st 2005 dated December 10, 2008 between Argor-Hearaeus SA and Bong Mieu Gold Mining Company. | |
3.36. | Reference is made to the 2009 20F Annual Report dated July 15, 2010 exhibit 3.36 Gold Export Certificates — dated December 31, 2009 | |
3.37. | Reference is made to the 2009 20F Annual Report dated July 15, 2010 exhibit 3.37 Convertible Loan Note Agreement and attachment dated March 26, 2010 | |
3.38. | Reference is made to the 2009 20F Annual Report dated July 15, 2010 exhibit 3.38 Gold Loan Note Agreement dated June 19, 2010 |
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3.39. | Zedex Amalgamation Document — reference is made to Form CB filed with the SEC on November 19, 2009. | |
3.40. | Reference is made to the 2009 20F Annual Report dated July 15, 2010 exhibit 3.40 Bau Joint Venture Agreement dated November 2006 and Schedules to Joint Venture Agreement | |
3.41. | Reference is made to the 2009 20F Annual Report dated July 15, 2010 exhibit 3.41 Foreign Investment Committee Approval of Bau Joint Venture dated November 9, 2007 | |
3.42. | Reference is made to the 2009 20F Annual Report dated July 15, 2010 exhibit 3.42 Tien Thuan Joint Venture Agreement — dated November 1, 2006 |
4.List of Subsidiaries
The Company has the following subsidiaries:
a. | Formwell Holdings Ltd. — incorporated in British Virgin Islands; | ||
b. | Bong Mieu Holdings Ltd. — incorporated in Thailand; | ||
c. | Bong Mieu Gold Mining Company Limited — incorporated in Vietnam (80% owned by Bong Mieu Holdings Ltd.; | ||
d. | Olympus Pacific Vietnam Ltd. — incorporated in British Virgin Islands; | ||
e. | New Vietnam Mining Corporation (NVMC) — incorporated in British Virgin Islands; | ||
f. | Phuoc Sun Gold Company Limited — incorporated in Vietnam (85% owned by New Vietnam Mining Corporation (NVMC); | ||
g. | Olympus Pacific Thailand Ltd. — incorporated in British Virgin Islands; | ||
h. | Kadabra Mining Corp. — incorporated in Philippines; | ||
i. | Olympus Pacific Minerals Inc Vietnam Ltd. — incorporated in Vietnam; | ||
j. | Olympus Pacific Minerals NZ Ltd. — incorporated in New Zealand; | ||
k. | Parnell Cracroft Ltd — incorporated in British Virgin Islands; | ||
l. | GR Enmore Pty Ltd. — incorporated in Australia (acquired as a result of the Zedex transaction which completed on January 12, 2010); | ||
m. | Binh Dinh NZ Gold Company Ltd. — incorporated in Vietnam (acquired as a result of the Zedex transaction which completed on January 12, 2010); | ||
n. | North Borneo Gold Sdn Bhd — incorporated in Malaysia (acquired as a result of the Zedex transaction which completed on January 12, 2010); | ||
o. | Bau Mining Co Ltd — incorporate in Samoa (acquired as a result of the Zedex transaction which completed on January 12, 2010); | ||
p. | KS Mining Ltd — incorporated in Samoa (acquired as a result of the Zedex transaction which completed on January 12, 2010) |
5. Consents
5.1. | Reference is made to the 2009 20F Annual Report dated July 15, 2010 exhibit 5.1 Consent of Terra Mining Consultants and Stevens & Associates |
12. Certifications
12.1 | Certification of Chief Executive Officer | ||
12.2 | Certification of Chief Financial Officer |
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13. Certifications
13.1 | Certification of Chief Executive Officer | ||
13.2 | Certification of Chief Financial Officer |
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SIGNATURES
The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that is has duly caused and authorized the undersigned to sign this annual report on its behalf.
Olympus Pacific Minerals Inc. | ||||
By: | /s/ John Seton | |||
John Seton | ||||
Chief Financial Officer | ||||
Date: December 14, 2010
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